Question

Ecker Company reports $1,825,000 of net income for 2017 and declares $255,500 of cash dividends on...

Ecker Company reports $1,825,000 of net income for 2017 and declares $255,500 of cash dividends on its preferred stock for 2017. At the end of 2017, the company had 400,000 weighted-average shares of common stock.

1. What amount of net income is available to common stockholders for 2017?

2. What is the company’s basic EPS for 2017?

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Answer #1

1. Compute the net income available to the Common Stockholders for 2017:

Note: Common Stockholders share of income is distributed only after distrubuting the share of preference shareholders. In other words, preference shares are the shares those are preferred over common shares at the time of profit distribution.Owners of preference shares receive regular dividends.

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