Question

Kelley Company reports $1,450,000 of net income for 2017 and declares $203,000 of cash dividends on its preferred stock for 2017. At the end of 2017, the company had 290,000 weighted-average shares of common stock. 1. What amount of net income is available to common stockholders for 20172. What is the company's basic EPS for 2017? Round your answer to the nearest whole cent.

Answer 1

Answer:

(1) $1,247,000

(2) $4.3

Explanation:

(1) Net income available to common stockholders:

= Net Income - Preferred Shareholders

= $1,450,000 - $203,000

= $1,247,000

Therefore, the amount of net income is available to common stockholders for 2017 is $1,247,000.

(2) Company's Basic EPS for 2017:

= Net income available to common stockholders ÷ weighted-average shares of common stock

= $1,247,000 ÷ 290,000

= $4.3