Chapter 15- Dividends Flashcards
What is the journal entry made for the payment date of dividends?
Dividends Payable: CS
Cash
What is the journal entry made for the declaration date of cash dividends?
Cash dividends
Dividends Payable: CS
What is the journal entry to record the allocation between the 2 classes of dividends?
Cash dividends: CS
Cash dividends: PS
Dividends Payable
What is the journal entry to record the declaration date of stock dividends?
Stock dividends: CS
Common shares dividends distributable
What is the journal entry to record the distribution date of stock dividends?
Common shares dividends distributable
Common shares
What is the journal entry to record the declaration date of stock dividends if common shares have a lesser value?
Stock dividends: CS
CS dividends distributable
Premium of commin shares
How do you calculate the price-earnings ratio?
market price per share/earnings per share
How do you calculate the payout ratio?
cash dividends/net income
How do you calculate the dividend yield?
Cash dividends per share/share price
How do you calculate the earnings per share?
net income-preffered dividends/number of common shares
What does the earnings per share indicate?
How much net income is earned by each common share
What does the price earnings ratio indicate?
The ratio between the market price of a share and the amount earned by the share (higher the ratio, higher the growth potential)
What does the payout ratio indicate?
What percentage of earnings the company is distributing to its shareholders (a high amount means the company is failing to reinvest in its operations)
What does the dividend yeild indicate?
How much income is generated by each common share
What are the three conditions of extraordinary items?
- Not expected to occur frequently
- Not typical of normal business activities
- Not subject to managers discretion
