Question

Net income was $204,100 for the year. Throughout the year, the company had outstanding 13,000 shares of $2.50, $50 par value preferred stock, and 104,000 shares of common stock.

Calculate the earnings per share for both preferred and common stock.

Answer 1

To calculate the earnings per share for both preferred and common stock, divide the net income by the number of shares outstanding for each type of stock.

Step-by-step explanation:

To calculate the earnings per share for both preferred and common stock, we first need to determine the total number of shares outstanding. In this case, the company has 13,000 shares of preferred stock and 104,000 shares of common stock.

For preferred stock, we divide the net income by the number of preferred shares outstanding. In this case, the calculation would be: $204,100 / 13,000 shares = $15.70 per share.

For common stock, we divide the net income by the number of common shares outstanding. In this case, the calculation would be: $204,100 / 104,000 shares = $1.96 per share.