Oregon, Inc. reported net income of $105,000. During the current year, the company had 5,000 shares of $100 par, 5% preferred stock and 10,000 of $5 par common stock outstanding. Oregon's earnings per share is

a. $8.00

b. $18.00

c. $5.08

d. $5.00

option (a) $8.00

Explanation:

Data provided in the question:

Reported net income = $105,000

Number of preferred stocks = 5,000

Par value of preferred stocks = $100

Number of outstanding stocks = 10,000

Now,

Earnings per share

= (Net Income - Preferred Stock Dividend) : (Common stock outstanding)

= ($105,000 - 5000 * 100 * 5%) : 10,000

or

Earnings per share = $8

Hence,

The correct answer is option (a) $8.00