I Module Test
2061
Subject: Financial Accounting II F.M. 50
Class: BBA 2nd Semester P.M. 25
Time: 1.5 hours
QN. 1. The following information is available to assist you in preparing a bank reconciliation statement for Rara Craft Co. on January 31, 2004 :
a. Balance as per bank Rs. 12,700
b. Outstanding cheques Rs. 6,800
c. Dishonored cheques returned by bank Rs. 900
d. Cheque under collection Rs. 1,100
e. Bank service charge for January Rs. 120
f. Bills receivable collected by bank Rs. 2,000
g. Interest on preceding bill Rs. 100
Required: i. Bank reconciliation statement for the month of January 2004, showing the cash balance to be shown in Balance sheet as on 31, January 2004 [10]
ii. Prepare the necessary entries on the books of Rara Craft Co. [5]
QN. 2.
a. . Following informations are extracted from the inventory record of Chaudhary Bros. from October 1 to December 12, 2003 :
Net sales from October 1 to December 12 Rs. 48,000
Beginning inventory – October 1 Rs. 9,600
Purchases from October 1 to December 12 Rs. 28,000
On December 12, 2003 a portion of Chaudhary Bros. inventory is destroyed by fire. The company determines by physical count, that the cost of the merchandise not destroyed is Rs. 1,600. & gross profit ratio as 30% of net sales. The company needs to estimate the cost of inventory lost for purposes of insurance reimbursement which is agreed to pay Rs. 2,000 as a full settlement for the inventory lost in the fire.
Required: Journal entries in the books of Chaudhary Bros. to record the Insurance settlement after necessary calculations for: Amount of gross profit, Cost of goods sold, & Value of ending inventory at the time of fire. [7]
b. Record the following transactions in the form of journal entries so as to highlight the difference between; Periodic & Perpetual inventory systems. [8]
Jan – 1, 2004 Purchased on account 4,000 units @ Rs. 1 each.
Jan – 5, 2004 Returned 800 defective units, which were damaged in transit.
Jan – 12, 2004 Sold on account 1,600 units @ Rs. 1.25 each.
QN. 3.
a. Bloomer Company purchased new machinery on 1st January 2000 . for Rs. 10,000. The machinery has four years life and zero residual value at the end of the fourth year.
Required:
I.Calculate the depreciation expenses for each of the four years using straight-line method and the double declining balance method. (Show the depreciation expenses in columnar form for comparison purposes.)
II. Assuming that the Bloomer Company falls under the 40% tax bracket; calculate the amount of tax saved by the Company for the year 2000 using the double decline & straight-line methods of depreciation. [7]
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 31st 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 31st 2003 and prepare necessary entries to adjust the allowance for doubtful debt account. [8]
QN. 4. Write short notes on: ( any two) [2.5×2=5]
a. Credit memoranda b. Depletion expenses c. Non interest bearing notes
**************************************Good Luck***********************************
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