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Question - At December 31, 2020, Cullumber Company has $540,000 of $100 par value, 5%, cumulative preferred stock outstanding and $2,010,000 of $10 par value common stock issued. Cullumber's net income for the year is $509,400.
Compute earnings per share of common stock for 2020 under the following independent situations.
(a) The dividend to preferred stockholders was declared, and there has been no change in the number of shares of common stock outstanding during the year.
(b) The dividend to preferred stockholders was not declared, and 10,000 shares of common treasury stock were held throughout the year. The preferred stock is cumulative.
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