Earnings Per Share—Two Classes of Stock El Paso Corporation reported net income of $80,000 for the year 2001. El Paso Corporation has 20,000 shares of common stock and 5,000 shares of preferred stock outstanding. The preferred stock, which cannot be converted into common stock, pays an annual dividend of $3 per share.

a. What amount of earnings per share would El Paso report if there were no preferred stock outstanding?

b. What amount of earnings per share will El Paso report for 2001?

c. What will be the effect on reported earnings per share if a dividend of $1 per share is paid on the common stock of

d. Paso Corporation in 2001? Explain your answer.