Question

Benedict Corporation reports the following information:

Net income $750,000
Dividends on common stock 210,000
Dividends on preferred stock 90,000
Weighted average common shares outstanding 250,000

Benedict should report earnings per share of
a. $1.80
b. $2.16
c. $2.64
d. $3.00.

Answer 1

Benedict Corporation should report an earnings per share (EPS) of $2.64 by subtracting the preferred dividends from the net income and dividing the result by the weighted average common shares outstanding.

Step-by-step explanation:

The question asks how to calculate earnings per share (EPS) for Benedict Corporation. To find the EPS, you subtract the dividends paid on preferred stock from the net income and then divide by the weighted average number of common shares outstanding. Thus, the calculation is: (Net Income - Preferred Dividends) / Weighted Average Common Shares. Using the given figures, the calculation is ($750,000 - $90,000) / 250,000, resulting in $2.64 earnings per share. So, Benedict Corporation should report an EPS of $2.64.