Question

Beck Incorporation reported a net income of $450,000 for the year. It declared and paid dividends of $50,000 to its common stockholders. During the year, Beck had an average of 100,000 common shares outstanding. Compute Beck's earnings per share for the year. (A) $4.50 per share (B) $4.00 per share(C) $3.75 per share (D) $3.25 per share

Answer 1

Answer:

Option (A) earnings per share: (EPS) 4.5

Explanation:

earnings per share: the amount eahc share of common stock earning during the period:

(net income - preferred dividends) / average shares outstanding

notice the common dividends do not affect the formula so we ignore this data.

450,000 / 100,000 = 4.5