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University of San Jose-Recoletos

Grace 2.0
Corporatio
n Audited by:
R&L CPAs

Submitted by:
Lopez, Lindy Ann
Semblante, Rhea Angelica

Submitted to:
Mr. Cedric Val Naranjo CPA

Yo-yo. The company’s principal place of business is located in M. you and your team were assigned to perform the audit of cash. Toy Soldier. handling and otherwise dealing with toys. The company has suppliers for the mentioned merchandise outside Cebu and sells these products to retail companies within Cebu City.0 CORPORATION was incorporated in the Philippines and was registered with Securities and Exchange Commission (SEC) on January 25. for the year ended December 31. Poblacion Occidental.COMPREHENSIVE PROBLEM: R&L CPAS. you obtained the following information regarding GRACE 2. Pepito Street. In connection with R&L CPAS’ audit of the company. The company’s main line of business is purchasing and selling toys primarily designed for young adults from ages 12-18 like remote control cars. Lego sets. Beyblade. On the same month. Jigsaw Puzzle. a well-known auditing firm in Cebu. Barbie Doll. Doll House. Play-Doh. Cebu.0 CORPORATION’s company background. The company is primarily engaged in the business of buying. selling. 2015. 2017. which were prepared by the company’s accountant. Consolacion. Robots. receivables and inventories by your senior auditor. Hot Wheels Toy Car. you were provided and were able to obtain the unadjusted trial balance of the company: . etc. Tea Set. GRACE 2.0 CORPORATION to perform the audit of the corporation’s financial statements. water gun. has been engaged by GRACE 2. At the start of the audit.

000.You started your audit with the following accounts: Cash The following are your cash composition: Cash in Bank-BDO ₱ 1.220.270.00 Petty Cash Fund 50.000.00 Total ₱ 1.00 .000.

In the course of your counting you found the following items: . Liz Demi. You began to count in the presence of the company’s cashier. you conducted a surprise cash count of the company’s cash on hand – petty cash fund and other cash which may be on hand with the company’s cashier. In line with your audit. Ms.

The following employees’ pay envelope have been opened and the money removed. you sent a letter of confirmation to BDO requesting the balance of the client’s cash account. 2018.00 JL Maraguinot ₱ 3. . b.00 ] Also. The balance of petty cash per book is ₱ 50.000.500. On January 02. the bank had sent you the company’s statement of account. Each envelope was marked “unclaimed”: JB Deleon ₱ 2.400.Additional Information: a. as part of your audit procedure.00.

ACCOUNTS RECEIVABLE .

000. terms FOB Shipping Point has not been recorded by the company. 000 Additional information: a. Accounts receivable outstanding for more than a year amounting to ₱20. Goods sold to Tom Book in December 31.00 should be written-off. 000 61 – 90 days 108. 000 91-120 days 215. c.000. 500 Accounts Receivable per Ledger 680. d. you determined that this amount includes the following: Accounts with debit balances: 60 days and below ₱ 325. 2017: Accounts Receivable ₱ 680. No collection was made yet. Confirmation replies received directly from customers disclosed the following exceptions: Customers Comments Audit Findings .000. Purchase returns from purchases during December totaling ₱130.00 on September 28. These are the following data you gathered as of December 31. 2017 amounting to ₱280. 000 Allowance for Doubtful Accounts 18.00 from sales made in October 11.000. 2017. 000 From the schedule of accounts receivable as of December 31.00 terms FOB Destination has not been recorded. Good sold on account for ₱100. The goods were not yet delivered as of December 31 and was included in the inventory count of that year. e. 2017 was credited to accounts payable. Sales returns amounting to ₱25. b. 500 Over 120 days 31.00 were erroneously debited to accounts receivable.000. f.You have also been assigned to audit the accounts receivable. 2017.

0 December 27. 000. Tim Park’s account was credited for the payment of the balance. 2017. terms FOB Shipping Point was lost in transit.Ni Hwang Balance amounting to ₱85. 2017. Ann Lee Did I win a lottery? My balance of ₱150.000.00 October 15. 2017.00 was paid on Grace 2.00 last It was found out that December 3. Kim Chee I do not owe this amount PASHNEA! I did not It was revealed that receive any merchandise from your company! goods sold to Kim Chee for ₱55.500.500.00.000. 2017 was erroneously debited to his account for ₱63. I only purchased Ai Do’s purchase on merchandise amounting to ₱36.00 has not been recorded by the company.00 Tim Park I already paid my balance of ₱30. Alan Zhang I already paid half of the price last December Payment of 23. Corporation erroneously credited Ann Lee’s accounts receivable account. Thank you was credited for Ni Grace 2. Ai Do I do not owe you this much.00 on December 28.0 Corporation! � Hwang’s payment on December 27. ₱19. 2017. You must’ve forgotten it Tin Park instead of huh.000. .00 Ann Lee’s account suddenly went down to ₱64.000. The company has acknowledged its responsibility for the loss of merchandise. 2017. 000.

0 Corporation’s Credit Manager.Based on your discussion with Grasya. Grace 2. you both agreed that an allowance for doubtful accounts should be maintained using the following rates: 60 days and below 1% 61 – 90 days 3% 91-120 days 5% Over 120 days 10% NOTES RECEIVABLE AND PAYABLE The company provided you the following data on their Notes Receivable and Notes Payable: .

000.00 In order to test the accruals and the composition of these notes. you observed the promissory notes issued by the company and those that are issued to the company. Notes Receivable ₱ 735.700. .00 Notes Payable ₱1.000.

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2017. 2017. Your review of the inventory count list disclosed the following: 1. it was not included in the inventory. The sale was properly recorded. Since the goods were not on hand during the count. it was excluded from the inventory. 2017. 100. Goods costing P7. which reflected a balance of P1. Merchandise costing P300.000 was out on consignment when the count was made. The purchase was not recorded nor the merchandise included in the inventory. .INVENTORIES On December 31. 000. terms FOB Destination. a physical count was conducted to merchandise on hand. Merchandise costing P35. 2.000 was shipped on December 28.0 Corporation on December 31. 3. terms FOB Destination.000 was delivered to Grace 2. Since the goods are not on hand during the count.

000 and were shipped FOB Destination.000 shipped FOB Shipping Point was excluded from the inventory.000 was not included in the inventory because it was not on hand during the count. Merchandise costing P143.000. Since the goods were not on hand.000. they were included in count. Included in the inventory are goods marked “hold for shipping instructions”. Since those goods were on hand. it was not included in the inventory.500 were marked “held on consignment” during the count.4.000. 8. The cost of the merchandise was P92. These goods cost P10. and further testing revealed that the purchase had been recorded. These materials are returns from customers and can’t be sold because of its defects. Merchandise on hand were included in the count. Goods in transit costing P34. 7. 2018. Included in the count were goods sold to KAYAPA Corp. The goods were shipped FOB Destination and the purchase was recorded in the books of Grace 2. . Merchandise sold to LABAN Corp. However. was still in transit during the count. This was already recorded as sales on account but were shipped only on January 6. 5.0 Corporation. 9. The cost was P79.000. Goods in transit costing P88. The goods cost P23. 6. 10. on FOB Destination. no purchase was recorded. It was however recorded in the books in the amount of P33.

Make the following: 1. Aging of Accounts Receivable 4. Inventory 3. Schedule of Notes Receivable and Notes Payable 5. Schedule of Accrued Interest Receivable and Interest Payable b. Accounts Payables . Bank Reconciliation 3. Compute for the adjusted balance of the following and present them in good form: 1.Requirements: a. Accounts Receivable 5. Cash Count Sheet 2. Sales 4. Allowance for Doubtful Accounts 2.