acct exam 3

probable + estimatable

journal entry

probable + non-estimatable

note

resonably possible + estimatable

note

resonably possible + non-estimatable

note

remote + estimatable

nothing

remote + non-estimatable

nothing

total interest expense?

total interest expense = total inflows - total outflows

carrying value?

carrying value = bond payable - unamortized discount

interest expense recorded for TABLE?

interest expense recorded = MR x CV

interest paid for TABLE?

interest paid = CR x FV

what can you find with PV?

pv = issue price OR changing carrying value

how to find PMT?

PMT = CR x FV

how to tell premium?

prem = CR > MR
prem = issue price > FV

how to tell discount?

discount = CR < MR
discount = issue price < FV

what is MR alternate name?

MR = effective interest rate

discount journal

int exp xxx
	cash     xxx
	discount xxx

premium journal

int exp xxx
premium xxx
	cash xxx

effective-interest method TABLE SETUP

int exp		int paid	amort		CV	

what are the names for issue price?

issue price = PV = CV

when to use MR or CR?

use MR for I/Y

use CR for PMT

what to record when bond is redeemed before maturity?

CV - CP = - (loss)

CV - CP = + (gain)

CP is cash price

where do premium T accts sit?

it is an ADJUNCT acct so it sits on credit side just like BP

cash dividends DECLARATION DATE journal entry

cash dividends 	xxx
	dividends payable - PS	xxx
	dividends payable - CS	xxx

cash dividends RECORD DATE journal entry

nothing!

cash dividends PAYMENT DATE journal entry

dividends payable - PS	xxx
dividends payable - CS	xxx
			cash  xxx	

stock repurchase journal entry

treasury stock	xx
		cash  xx

sold repurchased stock GAIN journal entry

cash  xx
		treasury stock  xx
		APIC  xx

sold repurchased stock LOSS journal entry

cash  xx
APIC  xx
	treasury stock  xx

disadvantages of preferred shareholders

1. no voting rights

2. no appreciation of stock

formula for retained earnings

ERE = BRE + NI - Dividends

rights of common shareholders

1. voting rights

2. preemptive right (maintain same percentage of ownership if new stocks are issued)

3. residual right (have a claim to assets if they liquidate)

special features of preferred stock

1. convertible (can be exchanged for common shares at a set rate)

2. participating (can share in special dividends reserved for common shareholders)

3. callable (company can buy shares back at a set price, like a callable bond)

preferred cumulative formula

Dividend Rate x Par Value x Shares Outstanding = $ per year

when do arrears matter?

FOR CUMULATIVE STOCK ONLY

what happens during stock splits?

if shares increase, par value & market price decrease

PPE purchase with stock and cash JOURNAL ENTRY

PPE   xx
	cash  xx
	CS    xx
	APIC  xx