Question

The income statement for Manassa Inc. shows income before income taxes $1,600,000, income tax expenses $820,000, and net income $780,000. If Manassa declared $300,000 of cash dividends on preferred stock and has 200,000 shares of common stock outstanding throughout the year, earnings per share is______________.

Answer 1

EPS $ 2.4

Step-by-step explanation:

The earning per share will be the net income less the 300,000 cash dividends on preferred stock as this amount isn't available for common stock over the total common stock outstanding.

780,000 income - 300,000 preferred dividends = 480,000

480,000 / 200,000 shares outstanding = $2.4 earning per share