financial accounting exam 3

issued notes payable

cash

• notes payable

monthly payment notes payable

interest expense

notes payable

• cash

interest expense notes payable

carrying value x interest rate x 1/12

cash notes payable

monthly payment

issue lease

lease asset

• lease payable

issue bonds

cash

• bonds payable

interest payment

interest expense

• cash

retire bond

bonds payable

• cash

Issue pirce of a bond

PV$ of face amount + PVA for periodic payments

debt to equity ratio

total liabilities/stockholders’ equity

return on assets

net income/average total assets

times interest earned ratio

(net income + interest expense + income tax expense)/ interest expense

issue common stock

cash

• common stock

issue par value stock

cash

• common stock

• additional paid in capital

cash par value stock

shares x price

common stock par value stock

shares x par value

issue preferred stock

cash

• preferred stock

• additional paid in capital

resell treasury stock

cash

• additional paid in capital (gain/loss)

• treasury stock

dividends on declaration date

dividends

• dividends payable

dividends on payment date

dividends payable

• cash

pay large stock dividends

stock dividends/retained earnings

• common stock

pay small stock dividend

stock dividends/retained earnings

• common stock

• additional paid in capital

return on equity

net income/average stockholders’ equity

dividend yield

dividends per share/stock price

earnings per share

(net income - dividends on preferred stock)/ average shares of common stock outstading

price to earnings ratio

stock price/earnings per share

purchase treasury stock

treasury stock

• cash