In Computing Earnings Per Share for a Simple Capital Structure

In computing earnings per share for a simple capital structure, if the preferred stock is cumulative, the amount that should be deducted as an adjustment to the numerator (earnings) is the

A) preferred dividends in arrears.
B) preferred dividends in arrears times (one minus the income tax rate) .
C) annual preferred dividend times (one minus the income tax rate) .
D) None of these answers are correct.

Correct Answer:

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