19 A corporation has 4000 shares 10 preferred stock of 5500

19) A corporation has 4,000 shares, 10% preferred stock of $55.00 par preferred stock (Preferred dividends are $22,000), and 8,000 shares of common stock outstanding. The net income for the year is $260,000. A) $55.00 B) $29.75 C) $32.50 D) $65.00

Solution

B) $29.75

Earnings per share = (Net income - Preferred dividends) / Common stock outstanding

Earnings per share = ($260,000 - $22,000) / 8,000

Earnings per share = $238,000 / 8,000

Earnings per share = $29.75