Question

Kelley Company reports $1,250,000 of net income for 2017 and declares $175,000 of cash dividends on its preferred stock for 2017. At the end of 2017, the company had 380,000 weighted-average shares of common stock. 1. What amount of net income is available to common stockholders for 2017

Answer 1

Net income available to common stockholders is $1,075,000

Step-by-step explanation:

Net Income $1,250,000

To Preferred Shareholders $175,000

Net income available to $1,075,000

common stockholders

Basic earnings per share = Net income available to common stockholders / weighted average shares of common stock

Basic earnings per share = $1,075,000 / 380,000

Basic earnings per share = $2.8290 per share.