To calculate the earnings per share (EPS) for Samuels, Inc. in 2011, we need to divide the net income by the weighted average number of shares outstanding.
First, we need to calculate the weighted average number of shares outstanding by taking into account both the preferred stock and the common stock.
1. Calculate the weighted average number of preferred stock shares:
The preferred stock has a total of 5,000 shares outstanding.
2. Calculate the weighted average number of common stock shares:
The common stock has a total of 20,000 shares outstanding.
Now, we need to determine the weightings of the preferred stock and common stock in the calculation.
3. Calculate the weight of the preferred stock:
The preferred stock has a par value of $100 and a 5% dividend rate.
Weight of the preferred stock = (par value of preferred stock * number of preferred stock shares) / (par value of preferred stock)
Weight of the preferred stock = ($100 * 5,000) / $100 = 5,000
4. Calculate the weight of the common stock:
The common stock has a par value of $5.
Weight of the common stock = (par value of common stock * number of common stock shares) / (par value of common stock)
Weight of the common stock = ($5 * 20,000) / $5 = 20,000
5. Calculate the weighted average number of shares outstanding:
Weighted average number of shares outstanding = Weight of the preferred stock + Weight of the common stock
Weighted average number of shares outstanding = 5,000 + 20,000 = 25,000
Finally, we can calculate the earnings per share (EPS):
EPS = Net income / Weighted average number of shares outstanding
EPS = $105,000 / 25,000
EPS = $4.20
Therefore, Samuels, Inc.'s earnings per share for 2011 is $4.20.
None of the given choices match the calculated EPS, so none of the given options (A, B, C, D) are correct.