Question

At December 31, 2019 Polk Company had 600,000 shares of common stock and 10,000 shares of 5%, $100 par value cumulative preferred stock outstanding. No dividends were declared on either the preferred or common stock in 2019. Net income for 2019 was $950,000. In its 2019 financial statements, Polk's 2019 earnings per common share should be

Answer 1

1.5

Step-by-step explanation:

basic earnings per shares=net income-preferred dividend / weighted-average earnings per shares

preferred dividend=10,000shares*5%*100=$50,000

net income-preferred dividend=$950,000-$50,000=$900,000

weighted-average earnings per shares=600,000

basic earnings per shares=$900,000/600,000 shares=1.5