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Junkyard Arts, Inc., had earnings of $394,200 for the year. The company had 45,000 shares of...

Junkyard Arts, Inc., had earnings of $394,200 for the year. The company had 45,000 shares of common stock outstanding during the year and issued 4,200 shares of $100 par value preferred stock. The preferred stock has a dividend of $6 per share. There were no transactions in either common or preferred stock during the year.

Determine the basic earnings per share for Junkyard Arts for the year. Round answer to two decimal places.

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Answer #1
Answer Earnings per share = (Net income - preferred dividend)/Weighted average common shares outstanding
                 = [$394,200 - (4,200 x $6)] / 45,000
                 = $369,000 / 45,000
                 = $8.20 per share
Preferred Stock Dividend = 4,200 x $6 = $25,200
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