Dividends on preferred stock
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-stated as a percent of par value or a dollar amount per share
-may be cumulative:
-passed dividends are owed to preferred shareholders (in arrears)
Preferred stock $1.00 par, 6%, 90,000 shares issued and outstanding
$1.00 6% 90,000 shares = $5,400
Financing activities
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, the cash activities that obtain cash from investors and creditors needed to
launch and sustain the business
-primarily affects liabilities and stockholder's equity
Inflows:
-cash received from the sale of the company's stock
-cash received from notes payable
-cash received from issuing bonds payable
Outflows:
-cash paid for the repurchase of the company's own stock
-repayment of principal on notes payable
-cash paid on maturity date of bonds payable
-cash paid for dividends
Measuring Interest expense
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1. Straight line method:
Cash payment = maturity value * stated rate per period
Discount/Premium Amortization = Total Discount or Premium/ # of interest
payments
Interest revenue (expense) = plug number
2. Effective Interest method:
Cash Payment = maturity value * stated rate per period
Interest revenue (expense) = CV of bond * market rate per period
Discount/Premium Amortization = plug number
Give this one a try later!
-stated as a percent of par value or a dollar amount per share
-may be cumulative:
-passed dividends are owed to preferred shareholders (in arrears)
Preferred stock $1.00 par, 6%, 90,000 shares issued and outstanding
$1.00 6% 90,000 shares = $5,400
Financing activities
Give this one a try later!
, the cash activities that obtain cash from investors and creditors needed to
launch and sustain the business
-primarily affects liabilities and stockholder's equity
Inflows:
-cash received from the sale of the company's stock
-cash received from notes payable
-cash received from issuing bonds payable
Outflows:
-cash paid for the repurchase of the company's own stock
-repayment of principal on notes payable
-cash paid on maturity date of bonds payable
-cash paid for dividends
Measuring Interest expense
Give this one a try later!
1. Straight line method:
Cash payment = maturity value * stated rate per period
Discount/Premium Amortization = Total Discount or Premium/ # of interest
payments
Interest revenue (expense) = plug number
2. Effective Interest method:
Cash Payment = maturity value * stated rate per period
Interest revenue (expense) = CV of bond * market rate per period
Discount/Premium Amortization = plug number
