In: Accounting
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Answer: |
Common shareholders Earnings = ( Net Income (-) Preference dividend ) = $ 1,140,000 (-) ($700,000 x 6% ) = $ 1,140,000 (-) $ 42,000 = $ 1,098,000 |
Reatined Earnings balance
= $ 2,464,000 (-) Preference dividend = $ 2,464,000 (-) $42,000 = $ 2,422,000 |
Total Common stockholder's
Equity = Balance of Common stock + Retained earnings Balance = $ 1,127,000 + $ 2,422,000 = $ 3,549,000 |
Rate of return for 2021 based on year
end common stockholder's equity = Common shareholders Earnings / Total Common stockholder's Equity = $ 1,098,000 / $ 3,549,000 (or) = 30.94% |