Kelley Company reports $1,750,000 of net income for 2013 and declares $245,000 of cash dividends on its preferred stock for 2013. At the end of 2013, the company had 390,000 weighted-average shares of common stock.

Kelley Company reports $1,750,000 of net income for 2013 and declares $245,000 of cash dividends on its preferred stock for 2013. At the end of 2013, the company had 390,000 weighted-average shares of common stock.

 1.

Net income	$	1,750,000
Less preferred dividends		(245,000)
Net income available to common stockholders	$	1,505,000

2.

Net income available to common stockholders	$	1,505,000
Divided by weighted-average outstanding shares		390,000
Basic earnings per share	$	3.86