VINZ PATRICK EDIOS PEROCHO BSA-3

Problem 1: Audit of Chun Corporation

Chun Corporation
Statement of Financial Performance
For the period ended, December 2017

Net Sales PHP 495,554.00

Less: Costs of Goods Sold PHP 222,600.00
Gross Profit PHP 272,954.00
Less: Operating Expenses
General and Administrative Expenses PHP 69,587.00
Selling Expenses PHP 63,473.00
Operating Income PHP 139,894.00
Other revenues and expenses
Gain on Sale of Investment PHP 89,340.00
Dividend Income PHP 7,590.00
Interest Expense -PHP 12,650.00
Loss from Settlement of Litigation -PHP 35,000.00
Loss from Expropriation of Properties -PHP 48,000.00
Loss of Warehouse due to Disaster -PHP 42,150.00
Loss on written-off inventory -PHP 17,024.00 -PHP 57,894.00
Income before tax PHP 82,000.00
Less: Income Tax 32% PHP 26,240.00
Net Income PHP 55,760.00

Chun Corporation
Statement of Changes in Retained Earnings
For the period ended, December 2017

Retained Earnings, January 1 PHP 187,000.00

Correction Error - unrecorded revenue PHP 60,000.00
Corrected beginning balance PHP 247,000.00
Add: Net Income for the period PHP 55,760.00
Dividends declared during the year -PHP 80,000.00
Retained Earnings, Decemeber 31 PHP 222,760.00

Problem 2: Audit of Brilliant Cosmetics Inc.

1.) Sales PHP 451,000.00

Sales Returns and Allowances -PHP 3,900.00
Sales Discounts -PHP 880.00
Freight Charges PHP 3,500.00
Adjusted Net Sales PHP 449,720.00 b

2.) Inventory, beg. PHP 89,700.00

Purchases PHP 141,600.00
Purchase returns and allowances -PHP 8,496.00
Freight-in PHP 5,525.00
Accrued Freght-in PHP 570.00
 Adjusted Costs of Goods Available for Sale PHP 228,899.00 c

3.) Unadjusted Inventory, end PHP 20,550.00

Goods held for Consignment PHP 18,600.00
Adjusted Ending Inventory PHP 39,150.00 d

4.) Sales Salaries and Commissions PHP 25,000.00

Advertising Expense PHP 16,090.00
Legal Services PHP 2,225.00
Insurance and Licenses PHP 7,680.00
Travel Expense-Sales Representatives PHP 4,560.00
Depreciation Expense-Sales/Delivery Equipment PHP 6,100.00
Depreciation Expense - Office Equipment PHP 4,200.00
Utilities PHP 6,400.00
Telephone and Postage PHP 1,475.00
Miscellenous Selling Expenses PHP 2,740.00
Officer's Salaries PHP 36,600.00
Unadjusted Balance PHP 113,070.00
Freight out PHP 3,500.00
Unrecorded Sales Commission PHP 108.00
Increase in Doubtful Accounts PHP 5,060.00
Unrecorded Advertising Expense PHP 606.00
Unrecorded Supplies Expense PHP 955.00
Unrecorded Depreciation PHP 650.00
Operating Expenses PHP 123,933.00 a
5.) Supplies Inventory PHP 2,180.00
Supplies on hand -PHP 1,225.00
Supplies Expense PHP 955.00 b

6.) Unadjusted Doubtful Accounts -PHP 160.00

Increase in Doubtful Accounts PHP 5,220.00
Adjusted Doubtful Accounts Expense PHP 5,060.00 b

7.) Unadjusted Interest Revenue PHP 550.00

Unrecorded Interest Receivable PHP 560.00
Adjusted Interest Revenue PHP 1,110.00 d

8.) Adjusted Net Sales PHP 449,720.00

Less: Cost of Goods Sold
Goods Avail for Sale 228,899
Ending Inventory (39,150) PHP 189,749.00
Gross Profit PHP 259,971.00
Less: Operating Expenses PHP 123,933.00
Operating Profit PHP 136,038.00
Other Expenses and Revenues
Interest Expense (4,520)
Loss on Sale of Equipment (72,600)
Interest Revenue 1,110
Gain on Sale of Assets 7,820
Dividend Income 5,150 -PHP 63,040.00
Net Income from continuing operation before taxes PHP 72,998.00 c
9.) Income from continuing operations before tax PHP 72,998.00
Multiply by: Income Tax Rate PHP 0.30
PHP 21,899.40
Income Taxes or 21,900 c

10.) Income from continuing operations after taxes PHP 51,098.00

Add: Gain from Discontinued Operation (net of tax) PHP 28,000.00
Net Income to be closed in retained earnings PHP 79,098.00 a