Multiple Choice Question 133 In determining earnings per share, dividends for th

Question

Multiple Choice Question 133

In determining earnings per share, dividends for the current year on noncumulative preferred stock should be

disregarded.

added back to net income whether declared or not.

deducted from net income only if declared.

deducted from net income whether declared or not.

Multiple Choice Question 80

Art, Inc., has 2,500 shares of 5%, $100 par value, cumulative preferred stock and 20,000 shares of $1 par value common stock outstanding from December 31, 2013 through Dec. 31, 2015. There were no dividends declared in 2013. The board of directors declares and pays a $22,500 dividend in 2014 and in 2015. What is the amount of dividends received by the common stockholders in 2015?

$22,500

$0

$12,500

$7,500

Explanation / Answer

In determining earnings per share, dividends for the current year on noncumulative preferred stock should be

Ans:- deducted from net income only if declared.

What is the amount of dividends received by the common stockholders in 2015?

Ans:- Amount payable as dividend to cumulative preferred stock holders = (2500*100)*5%

= $12500

Amount accumulated at the end of year

In determining earnings per share, dividends for the current year on noncumulative preferred stock should be

Ans:- deducted from net income only if declared.

What is the amount of dividends received by the common stockholders in 2015?

Ans:- Amount payable as dividend to cumulative preferred stock holders = (2500*100)*5%

= $12500

Amount accumulated at the end of year

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