The Islamia University of Bahawalpur

Department of Management Sciences

Subject: Financial Reporting & Analysis Time allowed: 2 hours Class MBA G-1 (6th Semester) Roll No. _______________

Depreciation Questions
Q-1- January 5, 19X1, Blind Man's sun acquired sound equipment for concert performances at a cost of $ 111800. The rock band estimated that they would use this equipment for four years, during which time they anticipated performing about 12 concerts. They estimated at that point they could sell the equipment for $3800. During 19X1, the band performed 4 concerts. Calculate the 19X1 depreciation using; A)- Straight-Line method. B)-The units of Production method.

Q- 2-A machine that cost Rs-105000, with a 4 year useful life and an estimated Rs-10000 salvage value, was installed in Patterson Company's factory on January 1. Note that the machine should not be depreciated below the estimated salvage value. Calculate the Machine depreciation using; 1- Double declining method. 2- Sum of year digit method.

Q-3- A truck that cost $24000 has a depreciated salvage value of $ 4000 and an estimated service life of 125000 miles. If the truck is driven 20000 miles during its first year and 25000 miles during its second year. Calculate the; 1- Depreciation per mile of the truck. 2- Depreciation expense of the truck for first and second year.

Inventory Costing Methods Questions

Q- 1-ABC Company purchased the inventory units as follows. January 5- 150 units @ Rs-15 per unit March 15- 50 units @ Rs-20 per unit June 19- 100 units @ Rs-25 per unit Ending inventory= 120 units, Company sales their units @ Rs-30 per unit. Calculate; 1- Cost of goods sold, Gross profit and Carrying value using FIFO inventory costing method. 2- Cost of goods sold, Gross profit and Carrying value using LIFO inventory costing method. 3- Using your findings in above calculations explain which inventory costing method is used for reporting purpose and which costing method is used for Tax benefit purpose. Q- 2-Sunrise electric company purchased 50000 units in year 2006 at a per unit cost of Rs- 30 per unit and sold 40000 units at a sale price of Rs-40 and transferred the ending inventory to the next year. In Year 2007 it purchased 40000 units at a per unit cost of Rs- 35 and sold 45000 units at a sale price of Rs45. Calculate; 1- Cost goods sold, Gross profit and Carrying value using FIFO inventory costing method. 2- Cost of goods sold, Gross profit and Carrying value using Weighted average inventory costing method. Q- 3-The Montgomery Company purchased the inventory units as follows. January 5March 15June 19100 units @ Rs-17 per unit 70 units @ Rs-19 per unit 50 units @ Rs-22 per unit

September 19- 20 units @ Rs-24 per unit Total units purchased= 240 units Montgomery Company sold 140 units @ a sale price of Rs-35 per unit. Note: Montgomery Company sold 100 units from January 5th inventory, 50 units from March 15th inventory and 30 units from June 19th inventory.

Calculate; 1-Cost of goods sold, Gross profit and Carrying value using LIFO inventory costing method. 2- Cost of goods sold, Gross profit and Carrying value using Specific Identification inventory costing method. (Note: Montgomery Company sold 100 units from January 5th inventory, 50 units from March 15th inventory and 30 units from June 19th inventory).

EPS Questions
Q-1- Jardan Corporation has 2500000 common stock shares authorized. They issue 1000000 shares on January 1st 2007 ,issue more 500000 shares on 1st may and repurchase 200000 shares on October 1st. They announce Rs-300000 of Preferred dividend in year 2007 with having the net income of Rs-1500000 in year 2007. Required: Calculate the Weighted average number of shares outstanding of Jardan Corporation. Q-2- Netwest Corporation has 3000000 common stock shares authorized. They issue 1050000 shares on January 1st 2008 ,issue more 600000 shares on 1st June and repurchase 300000 shares on September 1st. They earned a net income of Rs-2000000 in year 2008 and announce Preferred dividend of Rs200000. Required: A)-Calculate the Weighted average number of shares outstanding of Netwest Corporation. B)- Calculate the Basic EPS of Netwest Corporation. Q-3- Albert Company's Weighted average number of shares outstanding are 1250000 in year 2010 and conversion of 100000 new common stock shares takes place in year 2010. Net income reported in the same year is Rs-3000000. Required: Calculate the diluted EPS Albert Company.

Finals Questions

Q-1-Allen and Barker company are competitors in the same industry. Selected financial data from their year 2007 is as follows. Allen Company EBIT Interest paid Total Liabilities Total Assets Stockholders' equity 95000 10000 160000 356000 196000 Barker Company 170000 32000 575000 985000 410000

Calculate the following ratios for each company. 1-Times Interest Earned 2-Debt Ratio 3-Debt to Equity Ratio. Q-2-

Balance Sheet of C Margalla Company ===================================================================================== 31-12-2006 31-12-2007 31-12-2006 31-12-2007 Cash 5000 2000 Account Payable 1000 3000 Marketable Securities 2000 1000 Notes Payable 1000 2000 Accounts receivable 4000 2000 Accruals 2000 3000 Inventories 2000 18000 Current maturities 2000 2000 Prepaid expenses 2000 3000 Total current assets 15000 26000 Total C.L 6000 1000 _____________________________________________________________________________________ 10% Bonds payable 20000 35000 Gross fixed assets 74000 94000 12% preferred stock 25000 20000 Less Acc. Dep 8000 10000 Common stock-10 par 18000 30000 Net fixed assets 66000 84000 Retained earnings 12000 15000 Total assets 81000 110000 81000 110000 Note: Earnings After Tax of Margalla Company for the year 2007 is 50000. Required: Prepare cash flow statement for year 2007 using indirect method. Q-3- Hansell Company selected financial data is as follows of year 2010. Current Assets Current Liabilities Marketable Securities 105280 459842 215147

Net Receivables Calculate the Following ratios. 1-Current ratio 2- Quick ratio 3-Cash ratio

255000