Zerbel Company Limited ended the year with a net profit before taxes of $361,000 in 2015. The company is subject to a 40% tax rate, and committed to pay $52,000 in preferred stock dividends before distributing any earnings on the 200,000 shares of common stock currently outstanding.
a. Calculate Zerbel’s 2015 earnings per share (EPS).
b. If the firm paid common stock dividends of $0.60 per share, how many dollars would go to retained earnings?