• A publicly-owned company reports net income of $900,000 and pays a $200,000 dividend on its common stock and a $100,000 dividend on its preferred stock. The company started the year with 20,000 shares of preferred stock outstanding but issued an additional 8,000 shares on July 1. The company started the year with 100,000 shares of common stock outstanding but issued an additional 20,000 shares on July 1. The company had nothing outstanding during the year that could be converted into common stock. What should be reported as earnings per share ? $6.72 $5.45 $5.00 $7.27