Answer:
Poe's Year 2 Basic Earnings per share = $0.9
Explanation:
Provided Year 2 Net income = $330,000
Cash dividend paid to preference shares = $60,000
Net earnings available for equity = $330,000 - $60,000 = $270,000
Now outstanding common equity = 300,000 shares
Earnings per share = $270,000/300,000 = $0.9 per share
Note: Dividend paid to common stock is also earnings of common stock, that is dividend is part of common stock.
Therefore dividend paid to common stock will not be deducted and preference shares are paid in priority to equity, therefore dividend to preference is deducted to get the value of earnings available for equity.
Final Answer
Poe's Year 2 Basic Earnings per share = $0.9
