S220,000 (b) FIFO. Salam company purchased on equipment on January 1, 2016 for Tk. 3,00,000. The machine is expected to have a useful life of five years and a residual value of Tk. 20,000. Calculate depreciation for 2016, 2017 and 2018 using straight-line and reducing balance method. (a) Explain the advantage of reducing balance method over the straight-line method. (b) Give the Journal entry to record depreciation for year 2016. The information given below is taken from the record of two companies belonging to the same industry 18 Company A Company B Cash 1,40,000 3,20,000 Accounts Receivables 6,30,000 Inventory 8,20,000 9,50,000 Plant-net 11,00,000 23,00,000 22,80,000 42,00,000 Current liabilities 6,70,000 10,50,000 Debentures 3,80,000 5,00,000 Share capital 11,00,000 22,50,000 Retained earnings 1,30,000 4,00,000 22,80,000 42,00,000 Other data : Dividends 50,000 80,000 Sales 28,00,000 41,00,000 Cost of goods sold 21,00,000 34,00,000 Other expenses 5,40,000 4,30,000 Interest expenses 20,000 30,000 Income tax 70,000 1,20,000 Required : Answer each of the following questions by making a comparison of one or more relevant ratios : (a) Which company is using the shareholders investment more profitable? (b) Which company is better able to meet its current obligations? (c) Which company collects is receivable faster? (d) Which company is earning the higher rate of return on its total investment? (e) To which companies would you give a bank loan of Tk. 1,00,000 for a term of si months. (f) If you were going to buy the shares of one company, which one would you choose? 10 Write short notes (any six) - 386