Question

Spanos Corporation reported net income $26,000, net sales $400,000, and weighted-average common shares outstanding 4,000. There were preferred dividends of $2,000. What was the 2022 earnings per share?

Answer 1

Net income = $26,000

Less Preferred dividend = $2,000

Income available for common shareholder = $24,000

Earning per share = $24,000/4000 = $8,000

Step-by-step explanation:

Earning per share is earning after preferred dividends, divided by the number of common shares, in this case the net income of $26,000 must be reduced by the preferred dividends of $2,000, the resulting balance of $24,000 is divided by the outstanding common shares of 4,000, yielding a figure of $8,000, which represents the earning per share abbreviated as EPS.