Kathmandu Donbosco College question papers

Kathmandu Donbosco College

      (Purbanchal University Affiliate)                                                Time 1½ hours

New Baneshwor, Kathmandu                                                            Full Marks: 50

Mid-term Assessment 2004                                                 Pass Marks: 25

Attempt all questions

Group – A

Long answer questions (Attempt any one)                                  16marks

Q.N. 1.

a.       Define liabilities with its components.                                                                                                                                              [3]

b.       Classify the different types of Equities. How different types of preference shares effect in the Earning per share (EPS) and Dividend per share (DPS)? Explain with suitable example.                                                                                          [8]

c.        How is treasury stock similar and different from a company’s other investments?                                                               [5]

Q.N.2.

         a.  Jaya Trading Company estimates its uncollectible accounts expenses to be 1% of sales, Sales during 2003 were Rs.

                  125,000.

                 Required: Prepare journal entries for the following transactions:

1.        On 31^st December the Company prepared the adjusting entry for uncollectible accounts for 2003

2.       On January 15, 2004, the company decided that the account for Bimal Pandey in the amount of Rs. 750 was uncollectible.

3.       On February 12, 2004, Bimal’s check for Rs. 750 arrived.                                                                                              [3×3 = 9]

b. Gahana Kunja distributes fine stones. It sells on credit to retail Jewelry stores and extends terms of 2/10, net 30. For                 accounts that have probability of collecting the receivables as follows:

                               Not yet due                                                                               95%

                               One month past due                                                               80%

                               One to two months due                                                          60%

                               More than two months due                                                   40%

On December 31^st 2003, the credit balance in allowance for doubtful account is Rs. 12,300. The amount of gross receivables by age on this date is as follows:

                               Current (not yet due)                                                 Rs. 200,000

                               Past due:

                               Less than one month                                                   Rs. 45,000

                               One to two months                                                      Rs. 25,000

                               More than two months                                               Rs. 10,000

            Required: Prepare a schedule to estimate the amount of uncollectible accounts at December 31^st 2003 and prepare                         necessary entries to adjust the allowance for doubtful debt account.                                                                                                   [7]

Group – B

Short answer questions                                                     [8×3 = 24marks]

Q.N.3. Response the following transactions related to Bluebird Company that closes its accounts on December 31 every year.

a.       Issued a Rs. 10,000, 90 day, 9% note on December 1, 2003.

b.       Issued a Rs. 10,000, 90 day note payable and received cash of Rs. 9,775 from city bank Lalitpur on December 31, 2003

            Required:  Prepare necessary entries in the books of Bluebird Company in parallel from for comparison purpose                                          on December 1, 2003, December 31, 2003 and March 1, 2004                                                                                                             [8]

 QN. 4. Philips Company is one of the worldwide manufacturers of Electric and Media products & has given the franchise to Sayak-   ar Company Limited to import & sell the computer monitor in Nepal. Sayakar Company provides all customers with a two year             warranty guaranteeing to repair, free of charge, any defects reported during this time period. During the year 2003 Sayakar             Company sold 1,000 monitors at an average selling price of Rs. 9,750 each. Analysis of past warranty records indicates that     12% of all sales will be returned for repair within the warranty period. Sayakar Company expects to incur expenditures of Rs.         420 to repair each monitor. The account Estimated liability for Warranty had a balance of Rs. 50,000 on 31^st December 2002.     Sayakar Company incurred Rs. 80,000 in actual expenditure during the year.

Required:

                                        i. Prepare all necessary journal entries to record the events related to the warranty transactions during the year.         [6] ii. Determine the adjusted ending balance in the Estimated Liability for Warranties account.                                       [2]                                                                                                                                                                     

QN. 5. Write short notes on: ( any two)                                                                                                                                                            [4×2=8]

a. Investment in available for sale security    b. Stock dividend   c. Non interest bearing notes

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