Cr. Sales30,000RFJPIA CUP LEVEL 5 – Auditing Problems (EASY QUESTION #5)
Your audit of your client as of December 31, 2010 disclosed thatmerchandise costing P15,000 were still included in ending inventory althoughthese were already invoiced and recorded as sales to customers on December 31. The sales invoices totaling P25,000 were no longer recorded when the goods weredelivered on January 5, 2011. The adjusting entry is:
Answer: Dr. Cost of Sales15,000Cr. Inventory15,000
RFJPIA CUP LEVEL 5 – Auditing Problems (AVERAGE QUESTION #1)
Just In Love Corp. decided that the allowance for bad debts should beadjusted to equal the estimated amount required based on aging the accounts asof December 31. Following data were gathered:Allowance for bad debts, January 1, 2010P120,000Provision for bad debts during 2010 at 2% 60,000of P3,000,000 salesBad debts written off in 2010 75,000Estimated bad debts per aging of accounts on 80,000December 31, 2010What entry is necessary to adjust the bad debts provision?
Answer: Dr. Allowance for Bad Debts25,000Cr. Bad Debts Expense25,000RFJPIA CUP LEVEL 5 – Auditing Problems (AVERAGE QUESTION #2)
You completed your filed work for 2010 on April 10, 2011. Before issuance of your audit report on April 25, 2011, you were advised that on April 15, 2011 a largereceivable from a customer who is facing bankruptcy was written off asuncollectible. What should you do about this fact?
Disclose the loss in the 2010 statements.
Adjust the 2010 financial statements.
Date your report April 10, 2011.
Take up the loss in the 2011 statements.e.Do nothing.
RFJPIA CUP LEVEL 5 – Auditing Problems (AVERAGE QUESTION #3)
The closing inventory of Gandhi Company amounted to P284,000 atDecember 31, 2010. This total includes two inventory lines about which theinventory taker is uncertain.
500 items which had cost P15 each and which were included at P7,500. These items were found to have been defective at the balance sheet