Question

At December 31, 2021 and 2020, Cow Co. had 117,000 shares of common stock and 6,700 shares of 3%, $100 par value cumulative preferred stock outstanding. No dividends were declared on either the preferred or common stock in 2021 or 2020. Net income for 2021 was $670,000. For 2021, basic earnings per share was: Multiple Choice $2.01 $5.38 $8.73 $5.55

Answer 1

$5.55

Step-by-step explanation:

Calculation to determine what the basic earnings per share was

Using this formula

EPS=Net income-(Value cumulative preferred stock percentage*Net income)/Shares of common stock

Let plug in the formula

EPS=$670,000-(3%*$670,000)/117,000

EPS=$670,000-$20,100/117,000

EPS=$649,900/117,000

EPS=$5.55

Therefore For 2021, basic earnings per share was: $5.55