Determine amount of dividends that preferred shareholders

Assignment Help Accounting Basics

Reference no: EM13189722

Samuels, Inc. reported net income for 2011 is $105,000. During 2011 the company had 5,000 shares of $100 par, 5% preferred stock and 20,000 of $5 par common stock outstanding. Samuels' earnings per share for 2011 is

A.$4.00

B.$5.25

C.$6.50

D.$5.00
Determine amount of dividends that preferred shareholders are entitled to:
5000*100*5% = 25,000
Step 2: Determine amount of earnings left over for common shareholders after the payment of preferred dividends:
105,000-25,000 = 80,000.
Step 3: Use the EPS formula to determine EPS:
EPS = Earnings available for common shareholders/common shares outstanding
80,000/20,000 = $4.00

Note: Another way of writing the EPS formula is as follows:
(Net income - preferred dividends)/average outstanding shares.

Reference no: EM13189722

Questions Cloud

The seller deducts any accrued interest : When long-term investments in bonds are sold before their maturity date, the seller deducts any accrued interest since the last interest payment date from the selling price.

The journal entry to record the receipt of interest : Ruben Company purchased $100,000 of Evans Company bonds at 100 plus $1,500 in accrued interest. The bond interest rate is 8% and interest is paid semi-annually.

Available-for-sale securities are securities : Available-for-sale securities are securities that management expects to sell in the future, but are not actively traded for profit.

Albert received its first semiannual interest. : On February 1, 2011, Albert sold $40,000 of the bonds at 103 plus accrued interest. The journal entry Albert will record on April 1, 2011 for the purchase of the bonds will include:

Determine amount of dividends that preferred shareholders : Samuels, Inc. reported net income for 2011 is $105,000. During 2011 the company had 5,000 shares of $100 par, 5% preferred stock and 20,000 of $5 par common stock outstanding.

Using the cost formula you derived : Using the cost formula you derived above, what X-ray costs would you expect to be incurred during a month in which 4,950 X-rays are taken?

Recording federal income tax transactions and cash : On December 31, 2012, the accountant had estimated the total tax for 2012 to be $123,600 and had recorded a liability of $3,600 for federal income tax payable.

Journalize the entries for april 1 and 7. : On April 1, 10,000 shares of $5 par common stock were issued at $22, and on April 7, 5,000 shares of $50 par preferred stock were issued at $104.

Prepare the entries for todd company for the purchase : On January 2, Todd Company acquired 40% of the outstanding stock of McGuire Company for $205,000. For the year ending, December 31, McGuire earned income of $48,000 and paid dividends of $14,000.

User Account

All Pages