UT Knoxville ACCT 200 - Chapter 8 continued
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ACCT 200 Outline of Last Lecture I. Stock termsII. Treasury stockIII. 3 terms for stocksIV. Debt to Equity RatioV. LeverageOutline of Current Lecture I. Some EquationsII. EP-2III. 8-17IV. 8-18V. 8-22Current LectureI. Some Equationsa. Common Stock Earnings per share= (net income – preferred dividends paid) / outstanding common sharesi. Earnings per share is the maximum dividend a share of common stock could receive if the corporation retained none of its earningsii. Issued stocks – Treasury stocks = outstanding stocksb. Dividend Yield = (dividends per share of common stock) / (market price per shareof common stock)c. Dividend per share = total common stock dividend / shares of common stock outstandingd. Price Earnings Ratio = Market price per share of common stock / EPS of common stockII. EP-2 The business originally made a $15,000 purchase on account then converted it toa formal note payable (notes payable have interest, accounts payable don’t)a. Increase note payable 15000Decrease account payable (15000)These notes represent a detailed interpretation of the professor’s lecture. GradeBuddy is best used as a supplement to your own notes, not as a substitute.b. 15000 x .07 x (15/360) = 43.75interest expense (43.75)interest payable 43.75c. 15000 x .07 x (31/360) = 90.42interest expense (90.42)interest payable 90.42d. 15000 x .07 x (14/360) = 40.83interest expense (40.83)interest payable 134.17 (April+May)notes payable (15000)cash (15175)**Payment of principle is a financing cash flow on statement of cash flows**Payment of interest is an operating (less than 1 yr.) cash flow on SOCFIII. 8-17a. Jan 29increase cash 1725000increase common stock 750000increase APIC 975000financing on SOCF 1725000May 31increase cash 600000increase preferred stock 400000increase APIC 200000financing on SOCF 600000b. total paid in capital = total cash received from cash issuance 1725000 + 600000 = 2325000IV. 8-18increase land 280000increase common stock 200000increase APIC 80000NOTHING here goes on SOCF because we issued stock in exchange for landV. 8-22a. Feb 6—declarationIncrease dividends (55350)Increase dividends payable 55350b. March 9—date of record(no accounting done here)c. April 8—distribution dateDecrease cash (55350)Decrease dividends payable (55350)**Financing activity on SOCF =

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