Financial Accounting Guess Paper
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Q.No: 1
(A) Discuss analyzes the techniques used by it to minimize the credit risk.
(B) Grain products use straight line deprecation on all its depreciable assets. The accounts are adjusted and close at the end of each calendar year. On Jan 4, 1999, the corporation purchase machine for cash at a cost of Rs. 40000. its useful life was estimated to be 10 years is recorded to the nearest full month.
In 2000, after almost 2 years with the equipment, management decided that the estimated life of the equipment should be revised from 10 years to 7 years. No change was made in the estimate of residual value. The revised estimate of useful life was decided on prior to recording depreciation for the period ended 31, Dec 2001.
a) Prepare journal entries for the above events. Show separately the deprecation for 1999, 2000, and 2001.
b) What factors may have caused the company to revise its estimate of the equipment?s useful life.
c) Describe the deprecation method for various assets.
Q.No: 2
A) on April 1, 2001, Pat Hamilton, an attorney, opened her legal open practice, to be known as the law office of Pat Hamilton. The business adjusts its account at the end of each month. The following trial balance was prepared at april 30, 2001, after one month of operations:
LAW OFFICE OF PAT HAMILTON
Trail balance (april 30, 2001)
Cash 10060 (DR)
Unexpired insurance 3000 (DR)
Office supplies 4000 (DR)
Office equipment 26400 (DR)
Notes payable 16000 (CR)
Unearned retainer frees 16020 (CR)
Pat Hamilton capital 20000 (CR)
Pat Hamilton drawings 40000 (DR)
Legal fee earned 1580 (CR)
Salaries exp 2680 (DR)
Miscellaneous exp 1200 (DR)
Both side total 53600
Other data:
a) no interest has been yet paid on the note payable. Accrued interest at april 30 amount to Rs 180.
b) Salaries earned by the office staff but not yet recorded amounted to Rs 3470 at april 30.
c) A professional liability insurance policy was purchased on april 1. the premium of Rs 3000 for the first six months was paid and recorded as un expired insurance.
d) The business rents an office at a monthly rate of Rs 1600. on april 1, three rent was paid in advance and charged to the prepaid office rent account.
e) Office supplies on hand at april 30, amounted to Rs 1100
f) Office equipment was purchased on april 1, and is being depreciated over an estimated life of ten years.
Required:
1) prepare the adjusting entries required at april 30
2) prepare worksheet for the month ended april 30 2001.
B) during the current year, airport auto rental purchased 60 new automobiles at a cost of Rs 13000 per car. The car will by sold to wholesalers at estimated Rs 4000 each as soon as they gave been driven 50000 miles. Airport auto rental computers deprecation expense on its automobiles by the units of out put method, based upon milwage
Instructions:
a) compute the amount of deprecation to be recognized for each mile that a rental automobile is driven.
b) Assume that the 60 rental cars are driven a total 1650000 miles during the current year, compute the total amount of deprecation exp that airport auto rentals should recognize on this fleet of the cars for the year.
