Answer:
The correct answer is A
Explanation:
Computing the Earnings available for common stock as:
Earnings available for common stock = Net income - Dividend paid to preferred stock
where
Net income = $300,000
Dividend paid to preferred stock = $40,000
Putting the values above:
Earnings available for common stock = $300,000 - $40,000
Earnings available for common stock = $260,000
Now, computing the Earnings per share as:
Earning per share =Earnings available for common stock / Weighted average shares of common stock
where
Earnings available for common stock = $260,000
Weighted average shares of common stock = 200,000 shares
Putting the values above:
Earnings per share = $260,000 / 200,000 shares
Earnings per share = $1.30 per share
