Question 5 What are the warning signals to potential bad loans？ Explain them.

o get a bank license in HK.

Question 8

May Trading Co. Ltd. has following figures at 31 December Year 1

＄

Fixed assets 1,300,000

Provision for depreciation 350,000

Stock 450,000

Debtors(net) 142,500

Bank 250,000

Creditors 240,000

Accrued expenses 65,000

Share capital(＄10 par) 1,600,000

Profit and loss account 467,350

As the accountant of May Trading Co. Ltd., you are required to prepare its master budgets for the 6 months from 1 January Year 2 to 30 June Year 2. You have the following information available:

Sales

Purchase Wages Overheads excluding depreciation

(Units)

Oct Year 1 (Actual) 25,000 130,000 90,000 70,000

Nov Year 1 (Actual) 27,000 150,000 90,000 70,000

Dec Year 1 (Estimated) 33,000 170,000 90,000 90,000

Jan Year 2 (Estimated) 30,000 170,000 90,000 70,000

Feb Year 2 (Estimated) 35,000 180,000 100,000 90,000

Mar Year 2 (Estimated) 36,000 200,000 110,000 90,000

Apr Year 2 (Estimated) 34,000 190,000 110,000 90,000

May Year 2 (Estimated) 33,000 190,000 110,000 80,000

Jun Year 2 (Estimated) 37,000 160,000 120,000 80,000

Additional Information:

1. The selling price in October Year 1 was ＄9 per unit and this will be increased to ＄10 in February Year 2.

2. 30% of sales are on cash basis, credit sales are to be settled one month after the sales. It is expected that 5% of credit sales are uncollectible.

3. Purchases are to be paid for two months after purchases.

4. Wages and overheads are to be paid equally in the month incurred and the following months.

5. A machine will be purchased on 1 January Year 2 at a cost of ＄240,000.

6. The depreciation policy on fixed assets is 10% p.a. on cost on those owned at the end of the budget period.

7. The stock level at 30 June Year is estimated to be two months' purchases in the past.

8. The company plans to raise money from the stock market by issuing 50,000 preference shares at＄5 per share in March Year 2.

9. Accrued expenses are to be settled in one month.

Required:

(a)Prepare a Budgeted Profit & Loss Account for the 6 months period ended 30 June Year 2.

(b)Prepare a Cash Budgeted for the 6 months period ended 30 June Year 2.

Question 6

(a) What is a homer in due course?

(b) What rights does a holder in due course enjoy?

Question 4

Peter wants to buy a comer store. When negotiating in January, he was told by David, the owner of the store that the business of the store was very good and the average net profit from the store was＄100,000 per month for the last year. However, in March, a supermarket opened near the store and the business at the store became very slow. Then a contract for the sale of the store was signed between them, all the time David didn't mention anything to Peter.

Could Peter make a claim against David for misrepresentation. Advise Peter supported by cases.

Question 7

Explain: "Equal increases in government spending and tax revenues of n dollars will increase the equilibrium GDP by n dollars". Does this hold true regardless of the size of the MPS?

Question 5

What monetary policy tools can a government use to control money supply?

Question 3

A plastics monopolist faces the demand curve P=180 - Q, where Q is measured in thousands of pounds per year and P is measured in dollars per pound. Marginal cost is constant at MC=＄60 per pound.

(a)Find the monopolist's profit-maximizing price and quantity.

(b)What is the elasticity of demand at the profit-maximizing price?

Question 3

A medium-sized city has two major industries: financial services and manufacturing of electronic equipment. Suppose that restrictions on interstate competition in the market for financial services lead to a large expansion of the financial services sector in the city.

(a)What effect do you predict that this increase in jobs would have oil wages and housing prices in the city?

(b)What effect do you think there would be on the manufacturing sector in the city? Would you expect that manufacturing employment would rise or fall?