ACCT 201 1st Edition Exam 3 Study Guide Lectures 26 33 Lecture 26 March 31 Pg 409 and 410 Interest acrual May 1st company X receives a promissory note 1000 two month note with 8 interest May 1 Notes Receivable 1000 Accounts Receivable A 1000 notes rec 1000 acct rec L 1000 SE Lecture 27 April 2 1 Straight line depreciation Useful life how long company will use asset Salvage value what company can sell scrap for in future What company paid Cost Salvage years useful life depreciation per year OR divided by 12 for monthly 2 Activity base OR use base Calculate Standard rate Cost Salvage Estimated total usage standard rate ex miles driven machine hours run Standard Rate x actual use per time period depreciation expense 3 Double declining 2 estimated of years useful life rate rate x current value Lecture 28 April 4 Same as lecture 26 just did application of each method Pay attention to dates and know how to calculate depreciation of each method Double declining 2 2 useful life 10 2 OR 20 Current value x rate Year 1 80 000 x 20 16 000 dep year 1 Year 2 64 000 x 20 12 800 year 2 Year 3 51 200 x 20 10 240 year 3 80 000 16 000 64 000 12 800 51 200 Beg Year 3 useful life remaining was adj to 5 years not 8 Cost 80 000 Accum Dep 12 000 After 2 years 6 000 x 2 68 000 current value Cost Salvage years useful life 68 000 20 000 5 48 000 5 9 600 year Lecture 29 April 7 Amortization all about intangibles Uses straight line method A L SE copyright Amort Exp patent intangible Gross pay full amount earned After Social Security Fed tax State tax Medicaid and Fica you get your net pay Net pay actual paycheck A Cash Paycheck L Fed Tax State Tax SE Gross pay Salary Wage exp Lecture 30 April 9 Balance Sheet Liabilities Current liab i Acct Payable ii Sal Payable iii Current portion of long term debt REMEMBER BondsStated rate What s in the contract PAR Face value Market rate Similar risk length comparison Discount Sale Premium Expense Lecture 31 April 11 Went over self test questions on pg 539 1 2 3 6 10 similar questions will be on the exam A Cash Net after tax amount L State Tax Payable Fed Tax Payable FICA Salary Payable Net SE Salary or Wage Expense Gross full amount earned or Salary Payable net Cash net Lecture 32 April 14 PAR Value A Cash L SE Common Stock or Cash Common Stock PAR Additional Paid in Everything about PAR Company sold 100 shares of common stock with 1 PAR for 5 each A L SE 500 Cash 100 Common Stock 100 x 5 400 Add Paid in Pref Stock PAR for pref Add Paid in Entries for cash dividends 1 Date of Declaration A L SE Div Pay Dividend 2 Date of Record internal documentation only NO ACCT ENTRY Summarizes who are all of the owners and how many shares do they own 3 Date of Payment A L SE Cash Div Pay Different types of Stock Authorized amount of stock that a company is authorized to sell Issued sold to the market can t become unissued Outstanding only trait that can come and go dividends are only paid to outstanding stocks Treasury Stock company buys back stock retire Contra equity account Lecture 33 April 16 1 All of the following factors in computing depreciation are estimated except a cost b residual value c salvage value d useful life 2 A company purchased factory equipment on April 1 2012 for 80 000 It is estimated that the equipment will have a 10 000 salvage value at the end of its 10 year useful life Using the straight line method of depreciation the amount to be recorded as depreciation expense at December 31 2012 is a 8 000 b 7 000 c 5250 d 6000 cost salvage 80 000 10 000 years useful life 10 7 000 year 12 583 x 9 mo 5 250 3 A factory machine was purchased for 125 000 on Jan 1 2012 It was estimated that it would have a 25 000 salvage value at the end of its 5 year useful life It was also estimated that the machine would run 40 000 hours in the 5 years The company ran the machine for 4 000 actual hours in 2012 If the company uses the units of activity method of depreciation the amount of depreciation expense for 2012 would be a 12 500 cost salvage 125 000 25 000 b 20 000 total est usage 40 000 2 5 hours x 4000 actual use c 25 000 10 000 d 10 000 Interest is always calculated be what s in the contact stated Par goes in common stock Dividends have 3 important dates but 2 accounting entries Current means less than a year or in a business cycle whichever is longer Be sure to look at dates