At December 31, 2010, Cali Corporation has 2,000 shares of $100 par value, 8%, preferred stock outstanding

Question:

At December 31, 2010, Cali Corporation has 2,000 shares of $100 par value, 8%, preferred stock outstanding and 100,000 shares of $10 par value common stock issued. Cali’s net income for the year is $241,000.

Instructions

Compute the earnings per share of common stock under the following independent situations. (Round to two decimals.)

(a) The dividend to preferred stockholders was declared. 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. The preferred stock is cumulative. Cali held 10,000 shares of common treasury stock throughout the year.

Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on... Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may... Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their... Par Value
Par value is the face value of a bond. Par value is important for a bond or fixed-income instrument because it determines its maturity value as well as the dollar value of coupon payments. The market price of a bond may be above or below par,...