What are stocks?
Simply put: Stocks are pieces (a.k.a. “shares”) of a company’s equity. A company can decide to sell these shares for cash. In return, they give up … Read More
Buying Treasury Stock
Treasury stock is stock that’s been repurchased by a company. There’s two situations we need to familiarize ourselves with treasury stock: Buying treasury stock Scenario: … Read More
Preferred Shares
Preferred stock is just like common stock with a few added benefits for improved security of investment. First, preferred stock owners get first dibs on … Read More
Common Stock Shares
Scenario: You run a lemonade stand, and it has become more-and-more successful. People have been wanting to buy ownership in the company, so you decide … Read More
Stated vs. Effective Interest Rate
Once we understand how the stated annual interest rate enables us to determine the annuity payments on the bond, we can incorporate the effective interest … Read More
Issued at premium
If the effective interest rate is below the stated interest rate, then the bond was issued at a discount. Since the effective interest rate is … Read More
Issued at discount
If the effective interest rate is above the stated interest rate, then the bond was issued at a discount. Since the effective interest rate is … Read More
Annuity Payments
Annuities are the periodical payments that the borrower must pay to the lender for the bond. Scenario: Your lemonade stand is doing well, and you … Read More
What is a bond?
A bond is a promise made by a borrower to pay back a lender the amount borrowed (face value) at the bond’s maturity date, plus … Read More
Payroll Tax Expense
The Payroll Tax Expense journal entry documents the employee’s tax burden. Question: Your lemonade stand has 10 employees that work 40 hours a week and … Read More