The Following Information Is Available from the Balance Sheets at the End

The following information is available from the balance sheets at the end of 2016 and 2015 for Kitchen Equipment Company.
Net income for 2016 and 2015 was $120,000 and $460,000, respectively. No stock was issued during either year. Answer the following:
A How many shares of stock are outstanding at the end of 2016?
B If a company has preferred stock, why are preferred dividends subtracted when computing earnings per share?
C What is the amount of earnings per share for the year ended December 31, 2016?
D Explain what information is provided with earnings per share.

Correct Answer:

Verified

A $800,000/$5 = 160,000 shares
B Earning...

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