Answer:
Net income = $26,000
Less Preferred dividend = $2,000
Income available for common shareholder = $24,000
Earning per share = $24,000/4000 = $8,000
Explanation:
Earning per share is earning after preferred dividends, divided by the number of common shares, in this case the net income of $26,000 must be reduced by the preferred dividends of $2,000, the resulting balance of $24,000 is divided by the outstanding common shares of 4,000, yielding a figure of $8,000, which represents the earning per share abbreviated as EPS.
