A corporation has 4,000 shares, 10% preferred stock of $55.00 par preferred stock, and 8,000 shares of common stock outstanding. The net income for the year is $260,000. Calculate earnings per share. (Round your answer to the nearest cent.)
A) $55.00
B) $29.75
C) $32.50
D) $65.00
B .B) Earnings per share = (Net Income - Preferred dividend) / Weighted average number of common shares outstanding
Net income $260,000
Less: Preferred dividend* 22,000
Earnings available to common stockholders 238,000
Common shares outstanding / 8,000
Earnings per share $29.75
*Preferred dividend = 4,000 x $55.00 x 10% = $22,000
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