During Its Fiscal Year, Richards' Distributing Had Net Income of $100,000

question 10

Multiple Choice

During its fiscal year, Richards' Distributing had net income of $100,000 (no extraordinary items) and 50,000 shares of common stock and 10,000 shares of preferred stock outstanding. Richards declared and paid dividends of $.50 per share to common and $6.00 per share to preferred. The preferred stock is convertible into common stock on a share-for-share basis. For the year, Richards Distributing should report diluted earnings (loss) per share of

• A) $(0.80).
• B) $1.00.
• C) $1.67.
• D) $2.67.

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Definitions:

NAFTA

The North American Free Trade Agreement (NAFTA) was a treaty among the United States, Canada, and Mexico that eliminated most tariffs and trade barriers between the countries, in effect from 1994 to 2020.

Trade Deficit

A scenario in which a nation's expenditure on imported goods and services surpasses its revenue from exports, resulting in a greater outflow of money than inflow.

Trade Surplus

A situation in which a country exports more goods and services than it imports.

GATT Negotiations

Series of negotiations under the General Agreement on Tariffs and Trade aimed at reducing trade barriers and promoting international trade.