Ruby Company's net income was $100,000 last year.The company has 25,000 shares of common stock and 6,000 shares of $50 par value, 6% preferred stock outstanding.There was no change in the number of common or preferred shares outstanding during the year.The earnings per share of common stock was:
A) $9.12.
B) $7.63.
C) $3.28.
D) $2.35.

Question

Quizplus · Accepted Answer

Earnings per Share = (Net Income - Preferred Dividends) / Average Common Shares 
= {$100,000 - [(6,000 preferred shares × $50 × 6% )]} / 25,000 common shares
= $3.28

Ruby Company's Net Income Was $100,000 Last Year