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    Jan 24, 2013, 08:37 AM
    What is the formula to get dividends on preferred stock
    Bonds payable, 8% (issued at face amount) 20,000,000
    Preferred $2 stock, $10 par 20,000,000
    Common stock, $25 par 20,000,000
    Income tax is estimated at 40% of income.
    Determine the earning per share of common stock, assuming, that the income before bond interest and income interest tax is (a) 10,000,000, (b) 12,000,000, (c) 14,000,000. This is what I have so far:
    Earning 10,000,000 earnings 12,000,000 Earning 14,000,000
    Bond Interest 1,600,000 Bond Interest 1,600,000 Bond Interest 1,600,000
    Balance 8,400,000 Balance 10,400,000 Balance 12,400,000
    Income Tax 3,360,000 Income Tax 4,160,000 Income Tax 4,960,000
    Net Income 5,040,000 Net Income 6,240,000 Net Income 7,440,000
    Now I'm stuck I don't know how to figure out dividends on preferred stock,
    Earning available for common stock
    Divide number of common shares
    To get per share on common stock. Can you help me please.
    JudyKayTee's Avatar
    JudyKayTee Posts: 46,503, Reputation: 4600
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    #2

    Jan 24, 2013, 10:07 AM
    I would hate it, too. That's why I wasn't an accounting major.

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