Send-Up Examination-2004
Level: BBA 2nd Semester Full Marks: 100
Subject: Financial Accounting- II Pass Marks: 50
QN.1.
a. Why would the company prefer a shorter depreciation period for tax purpose than for financial reporting (book) purposes? [7]
b. Assume you own the retail business that offers credit sales. To estimate bad debts, your business uses the percentage of net credit sales approach. For the new fiscal year, how would you decide what percentage to use to estimate your bad debts? [8]
QN.2. a. Following table has been developed to assist you:
Assets | Acquisition cost | Accumulated depreciation | Book value |
A | 40,000 | ––––– | 25,000 |
B | 66,000 | 28,000 | ––––– |
C | ––––– | 37,500 | 12,500 |
Required: 1. Calculate the amount of missing figures
2. Develop the property plant and equipment category of balance sheet, how the individual assets would appears in balance sheet.
3. Prepare the Journal entries to record the sale of assets assuming assets B was sold for Rs.25,000.
4. Show the effect of required 3 in the accounting equation [5×2=10]
b. B & R enterprise purchased a computer on Jan. 1 2002 for Rs.36,000. The double decline balance method was used for depreciation purposes, with a four years life and a residual value estimate of Rs.5,000.
Required: (a) Calculate the amount of depreciation expenses and book value of computer for 31st Dec. 2002
(b) Prepare Journal entry to record the depreciation expenses.
(c) Show how the computer would appear on the balance sheet on Dec. 31st 2002 . [1+2+2]
QN.3. ‘Kid’s world’ is the retail store of Card; dolls & Gifts items had the following transactions during the year:
a. Kid’s world purchased inventory on account from a supplier for Rs 80,000. Assume that Kid’s world uses periodic inventory system.
b. On may 1 apartment was purchased for Rs 5,50,000. A 20% down payment was made & a 18 months 8% note was signed for the remainder.
c. Kid’s world returned Rs.4,500 worth of inventory purchased in item a, which was found broken when the inventory was received.
d. Paid the balance due on the purchase of inventory.
e. On June 1 Kid’s world signed a one year Rs.150,000 note to Union Bank and received Rs.145,000 only.
Requirecd: (a) Record all necessary journal entries relating to these transactions.
(b) Assume that Kid’s world’s accounting year ends Dec. 31st. Prepare any necessary adjusting entries. [10+5=15]
QN.4. Young heart Inc. plans to issue Rs.600,000 face value bonds with a stated interest rate of 8%. They will mature in 5 year. Interest will be paid annually. At the dated of issuance market rate is assumed to be 10%.
Required: (a) Calculate the issue price of bond.
(b) Calculate the premium or discount on issue of bonds.
(c) Prepare a 5 year amortization schedule for discount or premium as appropriate)
(d) Calculate the total cash interest payment & interest expenses.
(e) Prepare necessary journal entries for issuance amortization and payment of interest. [3+2+5+2+3=15]
QN.5. Ghana Plaza
Not yet due 100%
One month past due 95%
One to two months 80%
More than two months 60%
On Dec. 31st 2002 , the credit balance in allowance for doubtful account is Rs.15,300. The amount of gross receivables by age on this date is as follows:
Receivable category | Amount |
Current (not yet due) Past due: Less than one month One to two months More than two months | Rs. 200,000 75,000 50,000 10,000 |
Required: (a) Prepare a schedule to estimate the amount of uncollectible accounts at Dec. 31st 2002
(b) On the basis of the schedule in part (a) prepare journal entry on Dec.31st 2002 to estimate bad debts.
(c) Show how account receivable would be presented on the Dec. 31st 2002 balance sheet. [5×3=15]
QN.6 The following information is available concerning Oshkosh Inc.;
units unit cost
Beginning inventory 200 $10
Purchases:
Units
Required:
1. Calculate ending inventory and cost of goods sold for each of the following three methods:
a. Moving average.
b. FIFO.
c. LIFO.
2. For each of the three methods, compare which of the methods gives a different answer depending on whether a company uses a periodic or a perpetual inventory system? [15]
QN.7. Write sort notes on: (any two) [5×2=10]
a. Depletion expenses
b. Intangible Assets
c. Treasury stock
***********************************Good Luck********************************
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