ABC Paid $5,000 in Dividends to Its Preferred Shareholders

ABC paid $5,000 in dividends to its preferred shareholders.The 5 percent preferred shares (10,000 shares outstanding) are nonconvertible and noncumulative.The $5,000 dividend:

A) Will be added to the numerator of the EPS calculation.
B) Will be subtracted from the numerator of the EPS calculation.
C) Will be added to the denominator of the EPS calculation.
D) May not affect the EPS calculation, depending on the declaration date of the dividends.

Correct Answer:

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