Question

Ecker Company reports $1,750,000 of net income for 2017 and declares $245,000 of cash dividends on its preferred stock for 2017. At the end of 2017, the company had 310,000 weighted-average shares of common stock. What amount of net income is available to common stockholders for 2017?

Answer 1

$1,505,000

Step-by-step explanation:

Net income is the earning by the business calculated by deducting all the expenses from the revenue for the period. It is the earning which is available to distribute in the stockholders of the business. The preferred dividend must be paid if there is a profit in the period. The residual amount after deducting profit is available of common shareholders.

Net Income = $1,750,000

Preferred Dividend = $245,000

Income available for Common stockholders = Net Income - Preferred dividend

Income available for Common stockholders = $1,750,000 - $245,000

Income available for Common stockholders = $1,505,000