ACCT 200Exam #2 Study Guide ACCT ReviewExample ProblemXYZ company has authorized 50000 shares of 2%, $60 par preferred stock. XYZ company has 30000 shares outstanding. What is the preferred dividend per share?60 x .02 = 1.2/share**the rate is a percentage of the par amountXYZ company declares and pays an $80000 cash dividend. What is the total dividend paid to preferred shareholders?30000 outstanding x 1.2/share = 36000What is the amount of dividend paid to the common shareholder?8000 – 36000 = 44000Important Notes directly from professor- When looking at doubtful accounts, NEVER decrease accounts receivable. Allowance for doubtful accounts represents amount of accounts receivable the company does notexpect to collect in the future.- Treasury shares are always recorded at the price paid to reacquire them- Depreciation is the using up of FIXED assets- Straight line depreciation = (historical cost – residual value) x (1/useful life)- Double declining depreciation = (historical cost – accumulated depreciation) x (2/useful life)- Accumulated depreciation is a contra asset- Net book value = historical cost – accumulated depreciation= the amount of asset the company has left to use- A company will never pay itself a dividend (treasury stocks)- Corporations repurchase shares of stock to have them available for employee stock programsReview these homework problems most for test- 7-14- 8-17- EP-2- 8-26 (most tested question on
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