Preferred and Common Dividend interest, balance, income

burning0spear

(1) Where do each of these go on the income statement?

(2) On the balance sheet, will the preferred dividend be considered as part of interest paid or dividend paid?

leadcfa

CFAL1ed Wrote:
-------------------------------------------------------
> (1) Where do each of these go on the income
> statement?
>
> (2) On the balance sheet, will the preferred
> dividend be considered as part of interest paid or
> dividend paid?


huh?

hariRaj

What I meant was, on the Income Statement will Preferred Dividend be part of Interest Expense or part of Dividends after Net Income is calculated. Similarly for BS should preferred dividend be part of interest paid or dividend paid?

shootingstar

Assuming we are talking about firm's own dividends and paying cash, not accumulated dividend in case of preferred dividend.

Common dividend: at the bottom of income statement, after net income to common stockholders to arrive at retained earnings.
In balance sheet:
Debit retained earnings and credit dividend payables.


Preferred: depend on how you categorize the stock. Per IFRS, some should be booked as liabilities. For your plain vanilla preferred,

income statement: AFTER net income to arrive at net income to common stockholders (ignoring tax here).

Balance sheet
Debit retained earnings, credit preferred dividend payable.