Question

At December 31, 2011 and 2010, Miley Corp. had 180,000 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 2011 or 2010. Net income for 2011 was $400,000.

What does the 2011, earnings per common share amount to?

Answer 1

$1.94

Step-by-step explanation:

Computation of what 2011, earnings per common share amounted to

Using this formula

Net income-(Shares of 5%×Par value cumulative preferred stock outstanding× Shares percentage)/Shares of Common stock

Let plug in the formula

Earning per share of common stock =$400,000 – (10,000 × $100 × .05)/$180,000

Earning per share of common stock=$400,000-$50,000/$180,000

Earning per share of common stock=$350,000/$180,000

Earning per share of common stock=$1.94

Therefore the Earning per share of common stock will amount to $1.94