Professional Documents
Culture Documents
PROBLEM NO.1
In connection with your examination of the financial statements of john inc for the year ended
dec 31 2013 you were able to obtain certain information during your audit of the accounts
2. A credit for 4,110 on nov 30 2013 and a debit to allowance for doubtful accounts
Required
Based on the above and the result of your audit, answer the following
1. How much is the adjusted balance of accounts receivable as of dec 31 2013
a. b.559,560 c.540,930 d.548,190
2. How much is the adjusted balance of the allowance for doubtful accounts as of dec 31
2013
a. 19,706 c.19,830 d.19,147
3. How much is the doubtful accounts expense for the year 2013
a. 16,991 c.17,115 d.27,930
4. How much is the net adjustment to the doubtful accounts expense account ?
b.6,705 credit c.6,829 credit d.4,110debit
PROBLEM 2
DOK inc had the following long-term receivable account balances at dec 31 2012
note receivable from sale of division 1,500,000
note receivable from officer 400,000
transaction during 2013 and other information relating to doks long-term receivables were as
follows
1. The 1,500,000 note receivable is dated on may 1 2012 bears interest at 9% and represent
the balance of the consideration received from the sale of doks electronics division to
york company. Principal payments of 500,000 plus appropriate interest are due on may 1
2013,2014 and 2015. The first principal and interest payment was made on may 1 2013.
Collection of the note installments is reasonably assured
2. The 400,000 note receivable is dated dec 31 2012, bears interest at 8% and is due on dec
31 2015.the note is due from may rox president of dok inc and is collateralized by 10,000
shares of doks ordinary shares. Interest is payable annually on dec 31, and all interest
payments were paid on their due dates through dec 31 2013. The quoted market price of
doks ordinary share was P45 per share ok dec 31 2013
3. On april 1 2013, dok sold a patent to pen company in exchange for 100,000 zero-interest-
bearing note due on april 1 2015. There was no established exchange price for the patent,
and the note had no ready market. The prevailing rate of interest for a note of this type
at 멕 1 2013 was 12%. The present value of P1 two periods at 12% is 0.797 (use this
factor). The patend had a carrying value of 40,000 at jan 1 2013 and the amortization for
the year ended dec 31 2013 , would have been 8,000. The collection of the note
2017. The land could have been sold at an established cash price of 200,000. The cost of
the land to dok was 150,000. Circumstances are such that the collection of the installment
on the note is reasonably assured.
Yoke bank loaned 16,500,000 to bargain company on jan 1 2012. The initial loan repayment terms
include 10% interest rate plus annual principal payments of 3,300,000 on jan 1 each year. Bargain
made the required interest payment in 2012 but did not made the 3,300,000 principal payment
nor the 1,650,000 interest payment for 2013. Yoke is preparing its annual financial statements on
dec 31 2013. Bargain is having financial difficulty, and yoke has concluded that the loan in
impaired.
Analysis of bargains financial condition on dec 31 2013, indicated the principal payments will be
collected but the collection of the interest in unlikely. Yoke did not accrue the interest on dec 31
2013
16,500,000
1. What is the loan impairment loss on dec 31 2013
a. b.1,650,000 c. 0 d.16,500,000
2. What is the interest income to be reported buy yoke bank in 2014?
a. 1,504,305 b.979,305 d.1,650,000
THEORY
1. In the audit of which of the following general ledger accounts will tests of controls be
particularly appropriate?
a. Equipment b.bonds payable c.bank charges
2. The auditor most likely review an entity’s periodic accounting for the numerical sequence
been recorded in the subsequent year provide assurance about managements assertion
of?
d.exestence
5. the auditor finds the situation in which one person has the ability to collect receivables,
make deposit, issue credit memos, and record receipts of payments. The auditor suspects
the individual may be stealing from cash receipts. Which of the following audit
6. Which of the following most likely would give the most assurance concerning the
valuation assertion of accounts receivable?
A. vouching the amounts in the subsidiary ledger to details on shipping documents
b. comparing receivable turnover ratios with industry statistics for reasonableness
8. which of the following statement would an auditor most likely add to the negative form
of confirmations of accounts receivable to encourage timely consideration by the
recipients?
a. “this is not a request for payment; remittances should not be sent to our auditors in
d. “the following invoices have been selected of confirmation and represent amounts that
are overdue”
10 auditors may use positive or negative forms of confirmation request for accounts
receivable. An auditor most likely use
a. the positive form to confirm all balances regardless of size
c. a combination of two forms, with the positive form used for trade receivables and the