Send up question collection of VS Niketan College

V.S. NIKETAN COLLEGE

Pokhara University Affiliate

Send-Up Examination-2004

Level: BBA 2^nd 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 31^st Dec. 2002

                  (b)  Prepare Journal entry to record the depreciation expenses.

                  (c)  Show how the computer would appear on the balance sheet on Dec. 31^st 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. 31^st. 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 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 receivable as follows?

                                    Not yet due                             100%

                                    One month past due                95%

                                    One to two months                 80%

                                    More than two months            60%

            On Dec. 31^st 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. 31^st 2002

(b)   On the basis of the schedule in part (a) prepare journal entry on        Dec.31^st 2002 to estimate bad debts.

(c)    Show how account receivable would be presented on the Dec. 31^st 2002 balance sheet.                                                                      [5×3=15]

QN.6 The following information is available concerning Oshkosh Inc.;

                                                                        units                            unit cost

                        Beginning inventory               200                              $10

                        Purchases:

                           March 5                                300                                11

                          June 12                                  400                                12

                          August 23                             250                                13

                          October 2                              150                                15

Oshkosh, which uses a perpetual system, sold 1,000 units for $22 each during the year. Sales occurred on the following dates:

                                                                        Units

                        February 12                             150

                        April 30                                   200

                        July 7                                       200

                        September 6                            300

                        December 3                             150

            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********************************

Send up questions for VS Niketan College

V.S. NIKETAN COLLEGE

Pokhara University Affiliate

Send-Up Examination-2004

Level: BBA 2^nd 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. What are the different methods for treatment of bad debts? How does the % of net credit sales and % of year end accounts recevable approaches differed in terms of their accounting treatment?                                                                                                              [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 31^st Dec. 2002

                  (b)  Prepare Journal entry to record the depreciation expenses.

                  (c)  Show how the computer would appear on the balance sheet on Dec. 31^st 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. 31^st. 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 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 receivable as follows?

                                    Not yet due                             100%

                                    One month past due                95%

                                    One to two months                 80%

                                    More than two months            60%

            On Dec. 31^st 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. 31^st 2002

(b)   On the basis of the schedule in part (a) prepare journal entry on        Dec.31^st 2002 to estimate bad debts.

(c)    Show how account receivable would be presented on the Dec. 31^st 2002 balance sheet.                                                                      [5×3=15]

QN.6 The following information is available concerning Oshkosh Inc.;

                                                                        units                            unit cost

                        Beginning inventory               200                              $10

                        Purchases:

                           March 5                                300                                11

                          June 12                                  400                                12

                          August 23                             250                                13

                          October 2                              150                                15

Oshkosh, which uses a perpetual system, sold 1,000 units for $22 each during the year. Sales occurred on the following dates:

                                                                        Units

                        February 12                             150

                        April 30                                   200

                        July 7                                       200

                        September 6                            300

                        December 3                             150

            Required:

1. Calculate ending inventory and cost of goods sold for each of the following three methods:

                        a. Weighted Average Cost Method.

                        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.       Deferred Tax

    ***********************************Good Luck********************************

Question collection of Financial Accounting II from VS Moketan College

V.S. Niketan College

I Module Test

2061

                                   

                        Subject: Financial Accounting II                                                                    F.M. 50

                        Class: BBA 2^nd 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 1^st 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 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.                                                   [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***********************************