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PROBLEM NO.

The bookkeeper-cashier of EMOJI Corporation absconded on the evening of April 16, 2019,
apparently with a large portion of the company’s cash. He had taken with him certain accounting
records, including the cash journals and the general ledger. You are called upon to ascertain, if
possible, the shortage with which the missing employee may be charged.

You obtain the following information from the available subsidiary journals, ledgers, and other
data.

Balances at close of business, April 16, 2019


Accounts receivable 442,550
Accounts payable 207,300
Cash in bank, less checks outstanding 98,830

Transactions, January 1 – April 16, 2019


Sales, per receivable clerk 5,876,170
Cash sales none
Sales allowances in customer's accounts 18,330
Cash purchase of furniture, per dealer's invoice 3,000
Total merchandise purchase 3,615,260
Expenses paid, supported by paid invoices and
payrolls 1,865,830
Cash dividend declared, P50,000 (P10,000 unpaid) 40,000

A statement of financial position prepared from the books and other files follows:
Emoji Corporation
Statement of Financial Position
December 31, 2018

ASSETS
Cash 32,670
Accounts receivable 226,230
Inventory (at cost) 440,350
Furniture, net of accumulated depreciation 42,760
Total assets 742,010

LIABILITIES AND EQUITY


Accounts payable 114,720
Share capital 500,000
Retained earnings 127,290
Total liabilities and equity 742,010

51. What is the total amount paid for merchandise purchases?


52. What is the total amount of collections from sales?
53. What is the total amount of cash disbursement from January 1 to April 16, 2019?
54. What is the cashier’s accountability (correct cash balance before shortage) on April 15,
2019?
55. What is the amount of cash shortage?

PROBLEM No. 10

You were engaged to audit the financial statements of Lolo Corporation as of and for the period
ended December 31, 2019. The balances of the Accounts Receivable, and Allowance for Bad
Debts accounts as of December 31, 2018 are P3,452,400 and P69,048, respectively.

The following information are deemed relevant in your procedures:

 The unadjusted sales (all on credit) on your client’s records total to P15,424,500. Credit
terms are 2/10, 1/15, and n/30. Based on your cut-off procedures, you have gathered the
following shipping documents and sales invoices:
Shipping Doc. No. Sales Invoice No. Amount
115090 022009 140,000
115091 022006 134,200
115092 022011 340,000
115093 022008 54,670
115094 022012 103,880
115095 022004 234,300
115096 022010 22,400
115097 022007 81,950
115098 022005 102,000
 Shipping document no. 115095 pertain to the last shipment made during the year. From the
documents examined, sales invoices from 022004 to 022009 were recorded in 2019.
 Collections for the year total to P15,020,000, inclusive of an amount previously written-
off, P20,000. Relevant information related to the collections not pertaining to recoveries
are as follows:
o 43.12% pertain to collections within the 10-day discount period.
o 56.1% pertain to collections within 15-day discount period that did not qualify for
the 2% discount.
o The remaining amount pertains to collections that were not given any cash discount.
 Accounts written-off total to P9,850.
 Actual sales returns during the year total to 52,000, excluding the allowance for sales
returns for 12,500. An allowance of P30,000 is also set up to cover for future sales
discounts.
 An aging of accounts receivable is presented below:
Percentage from %
Age
adjusted AR Collectible
Current (0-30 days) 20% 100%
31-60 days 25% 99%
61-120 days 35% 95%
121-180 days 15% 90%
180 days past due 5% 70%
 The sales for the interim period ending September 30, 2019 total to P10,000,000. A bad
debts expense was provided for the interim period at 1% of the sales.

Questions:
46. What is the adjusted balance of accounts receivable as of December 31, 2019?
47. What is the balance of allowance for bad debts as of December 31, 2019?
48. What is the net sales for the period ended December 31, 2019?
49. What is the carrying value of the accounts receivable to be presented in the statement of
financial position as of December 31, 2019?
50. What is the additional bad debts expense to be recognized at the end of the year?