XYZ paid $10,000 in dividends in January of the current year to its preferred shareholders. The preferred stock is nonconvertible and noncumulative. The dividend:

Multiple Choice

• Will be added to the denominator of the earnings per share fraction for the current year.

• Will be added to the numerator of the earnings per share fraction for the current year.

• Will be subtracted from the numerator of the earnings per share fraction for the current year.

• might not affect earnings per share depending on the declaration date.