Time remaining: 1:33:49 12. Excerpts from Stys Corporation\'s most recent balanc

Question

Time remaining: 1:33:49
12.



Excerpts from Stys Corporation's most recent balance sheet and income statement appear below:

Year 2 Year 1
Total assets $1,589 $1,375
Total liabilities $494 $522
Stockholders’ equity:
Preferred stock, $100 par value, 10% $100 $100
Common stock, $2 par value 204 204
Additional paid-in capital--common stock 200 200
Retained earnings 591 349
Total stockholders’ equity $1,095 $853

Sales (all on account) $1,560
Cost of goods sold 710
Gross margin 850
Selling and administrative expense 340
Net operating income 510
Interest expense 18
Net income before taxes 492
Income taxes (40%) 197
Net income 295

Dividends on common stock during Year 2 totaled $43 thousand. Dividends on preferred stock totaled $10 thousand. The market price of common stock at the end of Year 2 was $8.2 per share.
The earnings per share of common stock for Year 2 is closest to:
A $2.80
B $2.89
C $4.82
D $5.00

Explanation / Answer

EPS is (Net income- preferred dividends)/ common shares outstanding So here we have (295-10)/102 (204 $2 par common outstanding)= 2.80. A

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