Liabilities
Record the issuance of a $100,000 bond sold at 104.
Cash 104,000
Premium on Bonds Pay. 4,000
Bonds Payable 100,000
What are the types of stock that a company can issue?
Common, preferred, and treasury.
What are the three types of activities seen in the Statement of Cash Flows?
Operating, investing, and financing.
What are the three types of ratios?
Profitability, liquidity, and solvency
What does the EPS ratio represent?
The ratio shows the amount of income that each share could hypothetically receive if all earnings were spread equally to common shareholders after preferred shareholders.
What payroll tax is paid by both the employer and employee?
FICA
What type of account is treasury stock?
A contra-equity account.
What are the two ways to complete the operating section of the Statement of Cash Flows?
Direct and indirect.
When using vertical analysis for the Balance Sheet, what will the denominator be?
Total Assets
What are the benefits of using equity or debt respectfully to finance a business?
Equity does not have to be paid back and dividends are optional.
Interest on debt is tax deductible and debt does not change stockholder control.
What is the largest difference between notes and bonds?
Bonds have a market which can influence price and interest rate.
Value = $1,000,000
Par = $.25
What types of accounts are affected from financing activities?
Loan term liabilities and stockholders' equity.
(Year 2-Year 1)/Year 1 = Percent change
When is the only time you would record a journal entry for contingent liabilities?
If the liability is probable and can be reasonably estimated.
A company with $500,000 worth of bonds outstanding wanted to retire one fifth of them early. So they agreed to retire the bond at a value of 102, record the journal entry.
Bonds Payable 100,000
Loss on Bond Retirement 2,000
Cash 102,000
If a company is authorized for 75 million shares, has 50.6 million issued and 4 million in treasury stock, how many shares does the company have that are outstanding?
46.6 million shares.
What is the purpose and advantage of the indirect method?
The indirect method accounts for non-cash activities affected by operating activities and makes adjustments to the net income and is easier and shorter than the direct method.
If total sales equals $75,000 and COGS equals $44,444, what is the gross profit margin?
40.7%
What is the difference in using the effective interest rate as opposed to the simple interest rate?
In the simple interest rate, the amount taken off each year is the same whereas the effective interest rate calculated each year.
If a company sold 3-year 8% interest bonds with a face value of 1 million at 103 with a market rate of 6%, what is the amount of premium left after the second year using the simple interest rate?
$10,000
If a company has cumulative preferred shares at a market value of $3 million with a dividend percent of 5%, what is the amount of dividends given to common shareholders in year two if the company declared and paid dividends of $125,000 and $200,000 for year 1 and 2 respectfully?
$25,000
Using the partial balance sheet, create the operating activities section of the Statement of Cash Flows:
Accounts Receivable: Change of -65
Inventory: Change of 80
Accumulated Depreciation: Change of 70
Accounts Payable: Change of 200
Interest Payable: Change of -50
S&W Payable: Change of 15
Retained Earnings: Change of 100
Net Income 100
Add Dep. Exp. 70
Changes in AR 65
Changes in AP 200
Changes in S&W Payable 15
Less Changes in Inventory 80
Changes in Interest Payable 50
Net Cash provided by Operating Activities 320
Using the following information, calculate the times interest earned ratio:
Sales Revenue: $150,000
Net Profit Margin: 15%
Notes Payable: $100,000(interest rate is 10%)
Income Tax Rate: 30%
3.925
How was I as a PAL Leader this semester?
The best ever!!!!!!!!!