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Abc company reported net income of $50,000 and was required to pay preferred stock dividends of $10,000. net income available to common shareholders is:__________

Sagot :

Net income available to common shareholders is:$40,000

What is net income available to common shareholders ?

The net income  available to common shareholders means the amount of earnings which of the company from the net income, which exclusively belong to the common shareholders from which common dividends and also retained earnings, since not all earnings belonging to common shareholders are paid as dividends, there is need to retain some and reinvest in the company.

The net income available to common shareholders  is the net income of the company minus the preferred stock dividends

net income available to common shareholders=net income-preferred stock dividends

net income=$50,000

preferred stock dividends=$10,000

net income available to common shareholders=$50,000-$10,000

net income available to common shareholders=$40,000

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