Arquandt Company's net income last year was $550,000. shares of common stock and 50,000 shares of preferred stock outstanding. There was no change in the number of common or preferred shares outstanding during the year. The company declared and paid dividends last year of $1.20 per share on the common stock and $1.70 per share on the preferred stock. The earnings per share of common stock are closest to:

A) $3.10.
B) $4.23.
C) $6.67.
D) $2.47.

Question

Wency Bondoc · Accepted Answer

Final Answer : A, Explanation :  Net income available to common shareholders = Net income - Preferred dividends= $182,000 - (50,000 shares x $1.70 per share)= $182,000 - $85,000= $97,000Earnings per share of common stock = Net income available to common shareholders / Number of common shares outstanding= $97,000 / 200,000 shares= $3.10 per share

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