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    Ocampo Cash and Receivables

    Uploaded by

    Gian Joshua Dayrit

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    © All Rights Reserved
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    T- AUDIT OF CASH AND CAgH EQUIVALENTS PROBLEM NO. 1 ~Composition of'cash and cash equivalents In connection with your audit of Caloocan Co: i ended December 31, 2010, you gathered the following: nc Current account at Metrobank ‘Current account at BPI = Liability P2,000,000 ” Payroll account ee (100,000) i estrit i 7 bile omens jetted in equivalent pesoa)nc 4,000,000 Brpployee’y Post dated check ~) Receivabe 4/000 1OU from controller’s sister — pecei aoe 10.000 Credit memo from a vendor for a purchase retura) 4 acqucttin 20°00 Traveler's check ale 50,000 ” Not-sufficient-funds check -) Rece\yabre 15,000 Money order —> 30,000 - Petty cash fund (P4,000)in currency and expense receipts for P6,000) 10,000 Treasury bills, due 3/30/11 (purchased 12/29/10) 200,000 ~ Treasury bills, due 1/31/11 purchased 2/1/10)-> gnerr’ 360.000 QUESTION: peace aed Based on the above information and the result of your audit. compute i cash equivalents that will be reported on the December ent of financial position. a} P2,784,000 c. P2,790,000 b. P3,084,000 - d. P2,704,000 Answei: A Suggested Solution: Current account at Metrobank 2,000,000 Payroll account oO te Traveler's check poe Money oracr aaa Petty cash fund (P4,000 in currency) Treasury bills, due*3/31/11 (purchased 12/29/10) 200,009 foe P2,184.900 ‘29 a Auf Cos nd Cash Pe puevet ocoaunt at BPY'- Current liabilities (Short term borrowings) ‘ccounts payable and included in the computation of Cost of sales «+ Netsuffsentfands check - Trade and other receivables ‘+ etty cosh fund faxpense receipts for P6,000)— Operating expenses + Treasury bills, due 1/31/11 (purchased 2/1/10) - Other financial assets (Short term investments 3 ‘PROBLEM NO. 2 ~ Composition of cash and cash equivalents tn the course of your audit of the Las Pinas Corporation, its controller 4s attempting to determine the amount of cash to be reported on its December 31, 2010 statement of financial position. The following information is provided: 1. Commercial savings account of'P1,200,000 and a commercial ‘checking account balance of 1,800,000 are held at PS Bank. 2. ‘Travel advances of P360,000 for executive travel for the first quarter of the next vear (employee to reimburse through salary deduction). 11- Audit of Cash and Cash Equivalents 6 A bank overdraft of F250,000 has occurred at one ofthe bank the company uses (v deposit its cash receipts, At time, the company has no deposits at thie banc” “tM Present 7, The company has two certificates of deposit, each totaling 1,000,000. These certificates of deponit tore maturity of 120 days. 8, Las Pitas has received a check dated Je 2, 2011 in the aniount of P150,000. emuary 2, 20u as agreed to maintain a cash bélance of #200,000 at all, Bank to ensure future credit availability. aoe 10. Currency and coin on hand amounted to. s.000, fuuded Based on the above and the result of your 7 cas lent sl of Ona nk O26 sc u af dapoat ~ her francal assets (Shor term, nee 19.2011 (POG - Trade and other receivabieg pmosnan Wo, 3 - Compton of used cas alonce ‘ccount of the Makati Corporation as of December 31, 2019 cash Seale Ms with Real Bank P 900,609 on Petection not yet deposited to the bank 350,000 ‘Feastomer’s check returned by the bank for insufficient fund . 150,000 ‘Accheck drawn by the Vice-President of the Corporation ‘dated January 15,2011 > 70,000 Acheck drawn by a supplier dated December 28, 2010 {or goods returned by the Corporation N 60,000 ‘Acheck dated May 31, 2010 drawn by the Corporation ‘against the Piggy Bank in payment of customs duties. ‘Since the importation did not materialize, the check the customs broker. This check was an out ‘check in the reconciliation of the Pregy Bank account : 410,000 Potty Cash fund of which B5,000 is in currency; P3,600 ‘in form of employees’ LO.U. s; and P1,400 is supported by approved petty cash vouchers for ‘expenses all dated prior to closing of the books on. December 31, 2010 10,000 ‘Total 1,950,000. ‘Less: Overdraft with Piggy Bank secured by a Chattel 300,000 PL.650,000 I - Audit of Cash and Cath Equivalents ‘Suggested Solution: (Current account with Real Bank Undeposited collection P sons00 ‘Supplier's check for goode : 350,000 Unexpended petty cash "704 YY the Corporation 69.000 t account with ; : ae Piggy Bahk (P40,000 - P300,000) 119.000 * Buaaso00 PROBLEM NO. 4 Compytation of adjusted cash and cash equivalents Demand deposit account Time deposit - 30 day © "Toootaoo NSF cheek of customer ~ 20,000 Money market placement fue June 20,013) 1,500,000 » Savings deposit jn a close? bank 100,000 * TOU from empigyee — 20,000 Pension fund * (org €" 3,000,000-~ Petty cath fund 10,000 - Customer's check dated January 1, 2011 50,000 ‘Customer's check outstans ding for 18 montha _40.000 Total & PZ760.000 ‘Additional information follows: eee December 3T, 2010 but mailed to suppliers on January 5. 2031. wv! QUESTION: ‘The cash and cash equivalents to'be shown on the December 31, 2010 starcment of financial position 1s 33 a cosh Bmivdens . Spo 2 ms 2 as a. P4110, s s meio 000 ansir: © ep cant 0 wc 2,000,000 Dera emeposit account PT 200,000 Undelivered check 100,000 3 pooated ceckissued 140,000) P1,900,099 Window dressing fe 3,000,009 -20daye : 7 es a ——10,009 Pe dca equivlents F2210.090 2 pmomusa RO. 5 - Computation of adjusted cash balance eh account in the ledger of Pateros Company had @ balance of however, diselosed the following: let open up to January 5, 2011, und cash sales aoe DOO were considered as sales in December. + Checks of #74.400 in payment of liabilities wes Dermuber 31, 2010, recorded in the book ‘elivered to payees. check are eventually realized. + Customer’ check for P12,000 “NSF* on December 27, 2010. ‘erbonal campotera which will soon bedelivered, 34 REGS SP december 31, 2010. An examination of the account’ ‘+ Postdated checks totaling P62;400 are being held by the Cashier as part of Cash, The company’s experience shows that post-dated Geposited with but returned by Bank, ‘The Cash acount inchudes P20,000 earmarked for the purchase of E (QUESTION: aah belance to be shown December 31,2010 should be" '* St=Rent of flnanciaf potion at ‘a. P799,200 (E) Paos, b. P724,800 a Pie800 * answer: © Suggested Solution: Unadjusted cash belance 844,800 Add (deduct) adjustments: January receipts recorded as December receipts (120,000) Undelivered check 74,400 Postdated checks received (62,400) NSF check (12,000), Cash earmarked for personal computers, £320,000 Adjusted cash balance age.200 PROBLEM NO. 6 - Computation of adjusted cash balances ‘You were able to gather the following from the December 31, 2010 trial balance of Mandaluyong Corporation in connection with your audit of the company: Cash on hand P.500,000 “10 ow Petty cash fund 10,000 4 BPI current account 1,000,000 ‘Security Bank current account No. 01 (080,000 Security Bank current account No. 02 (80,000) PNB savings account—> 200,000 PNB time deposit 500,000 ‘Cash on hand includes the following item: 8. Customer's check for 10,000 retumed by hank on Recember 26, 2010 due to insufficient fund but subsequently and cleared by the bank én January 8, 2011. and Cash Baie — aud of 8" ve enck for 720,000 dated January 2, 2011, Feceiveg stomer's check & SMpecember 2, 2010. 4 (rom customers, P30,000, Powtal money order! ¢ ; ay ca un conse of the alowig Heme ae of December 3), pie 2010. rrency and caine, » 2009 - cure erane (00S) ; 2000 pet tte lope marked soletions for anity” with names attached vata LUnreplninhed petty cash vouchers , 400 sheck drawn by Mandaluyong Cot poration, payable to , ‘the petty cashier — 41099 ° P0,109 checks drawn. by Mandaluyong Corporation tuded the Inctuded ame rent account and recorded in December 2010 are faainat the BPI curren the following a. Check written and dated December 29, 2010 and delivered to ayee pn January 2, 2011, PBO,000.~ b ‘written on December 27, 2010, dated January 2, 2011, delivered to payee on December 29, 2010, 40,000. ‘The credit balance in the Security Bank current account No. 2 tepresents checka drawn in excess of the deposit balance. These ‘checks were atill outatanding at December 31, 2( ‘The savings account deposit in PNB has been set aside by the board of directors for ecquisition of new eguipment. This account is expected to ibe disbursed in the next 3 months after the end of the reporting period. (QUESTIONS: Based on the above and the result of your audit, determine the ‘adjusted balances of following: 1, Can on hand & 420,000 c, P470,000 . PS30,000 @. P440,000 alls ii ad ». P7,200 ©. P2,000 4. 4,900 je) 1,120,000 A F1.080.000 4. Cash and cash equivalent " a. P2,917:200 “. b. 3,074,900 © eee Answers: 1) D; 2); 3)B; 4)D ‘Suggested Solution: ‘Question No. 1 Unadjusted cash on hand NSF check Post dated check received Adjusted cash on hand ‘Question No, 2 Petty cash fund per total Employees’ vales (IU) Currency in envelope marked “collections for charity” Unreplenished petty cash vouchers Petty cash fund, as adjusted Alternative computation: Currency and coins Replenishment check Petty cash fund, as adjusted - re aut csh ond cosh BOUT Ha. 9 question ap curent acount P1,000,099 Unadjusted 80, oad check 000 pout dated check delivered ——40.009 ‘Adjusted BPI current account ‘Question No. 4 Cast on hand (see n0. 1) P 440,000 petty cash fund (see no. 2) 6,000 BPI current account (see no. 3) 1,120,000 Security Bank current account (net of overdraft of P80,000) 1,000,000 NB time deposit 500,000 Cash and cash equivalents, as adjusted F3.066.000 PROBLEM RO. 7 - Bank reconciliation; Computation of adjusted cash in bank balance ‘The books of Manila's Service, Inc. disclosed a cash balance of 7687,570 on December 31, 2010. The bank statement as of December 800. Additional information that might balances follows: (a) Check number 748 for P30,000 was originally re books as 45,000. +- IF ODD ey swconded one (0) The deposit of December 24 ember 24 was recorded on tl ‘but it was actually ‘@ deposit of P27,000. ic © Ouitnigstnch ted 798,850 a8 eee There were ban, service ace a charges for December of P2,100 not yet (0 Manas a Mania’s account tad been cha mers NSP che fr Dee @ fon December 26 for a 38 11- Audit of Cash and Cash Equivalents (@ Manila property deposited P5,000 on December 3 that waa ‘not recorded by-the bank, (n) Receipts of December 31 for P134,250 were reconted by the bank on January 2. () A bank memo stated that a customer's note for P45,000 and interest of P1,650 had been collected on December 27, and the bank charged a P360 collection fee (QUESTIONS: Based on the above and the result of your audit, determine the following: 1. Adjusted cash in bank balance a. P583,200 (e P589,200 b. P577,200 d. P512,400 2. Net adjustment to cash as of December 31, 2010 a. P104,370 () P'98,370 b. P110,370 ad = P175,170 Answers: 1) ©; 2) € Suggested Sotution: Question No. 1 Balance pet bank statement, 12/31/10 ‘Ada: Deposits in transit 134,250 Bank error-deposit not recorded __6,000 Total Less: Outstanding checks ‘Adjusted bank balance, 12/31/10 Balance per books, 12/31/10 Add: Book error - Checks Na 748 Customer note collected by bank ‘Total 15,000 46,290 29 ‘and Cash Bquivalemts sean 142,650 11- Audit of Cash and Cash Equivalents Less: Dishonored note corded 1,950 ‘Check No. 193 was made for — Dok erormproPeTiY af account. However it wav enteea a a PA89,007 in payment ‘deposit 12,960 498,000. ‘Navotae authorized the bank to euteraPerent a oS nov check "21100 _159.669 bill as submitted directly tothe beaks © Sutomatcally pay ite water ‘service charges Lee (31/10 B582.200 ar 12 QUESTION: Based on the above and the result of vou bank balance as of December 31,2010 ig» na the somtect cash in Question No. 2 12/31/10 P687,570 a. P7,320,000 3 ‘Unadjusted balance pe Oke, 19/ $89°200 b. P7,362,000 cel 7,341,000 “Adjusted book belance, 12/31// i d. P9,541,000 tet edjustinent to cash ~ credit 28370 Answer: © PROBLEM RO. 8 _Bakrematason: Computation of adjusted cash in ‘Suggested Sotution: (acsus)company’s newly hired assistant prepared the following bank Balance per bank statement, 12/31/10 11,260,000 dio on December 31, 2010: ‘Add: Deposits in transit 500,600 Total 2,810,000 . 12,760,000 Beak san «31 deposit in transit P1,500,000 Less: Outstanding chécks 3,219,000 Cera nt ote 5,000,000 Erroneous bank credit 2,200,000 _5,419,000 farereat on note 200,000 6,800,000 Adjusted bank balance, 12/31/10 241,900 ‘Total selene 9,610,000 esx: NovlhesParapan’s post Balance per books, 12/31/10 2,810,000 eeaea Add: Customer n te collected by bank 5,000,000 : ‘Adjusted book balance beesies! on note 300,000 1k error - Check No. 193 9.000 Bank tlance Total Perc) ‘Add: Error on check No. 193 9,060 Less: Bank service charges n9.000 Total 17,269.00 Preauthorized payments for wat. a less; Péauthorized ts for ats i esa Pen 248,000 bill 248,000 Some peven _NSF check 440,000 __778,000 a Stenting hse Se oeeeer Adjuisted book balance, 12/31/10 PZ241,000 7,362,000 P1S0,000 p2g.000 17000 I 50,2010 Crs Heme 36.0 ‘The bank siatement for December 2010 contains the following data; reais an NSF check of P8,000 P110,000 ‘and a service | ‘of P400, 96,000 ‘AY cutstanding checks on November 30, 2010, including the ‘redit, were cleared in the bank in December 2010. wank ‘There were outstanding checks of P30,000 and deposits in transit of 38,000 on December 31,2010, (QUESTIONS: ‘Based on the above and the result of your audit, answer the following: 1. How much is the cash balance * a P154,000 per bank on December 31, 2010? ¢) P164,000 . P150,000 4. P172,400 2. How much ia the December receipts per books? rma ©. P110,000 d. 148,000 3. ee the December disbursements per books? ch ee ‘c. P89,600 a 4. P98,000 fow much is the, 4. 150,099 “tt balance per books on December: 31, 2010? D Piz & P180,400 4. P162,600 2 Answers: 1} C; 2) A; 3)B; 4)C; ye ‘Suggetted Sotution: Question No.1 Balance per bank, Nov. 30, 2010 P150,000 pa Total deposits per bank statement 10,000 "260,000 Less: Total charges per bank statement ‘96,000 Balance per bank, Dec. 31, 2010: Biss.000 (Question No. 2 Total deposits per bank statement 110,000 Less deposits in Yransit, Nov. 30 24,000 Dec. receipts cleared through the bank 186,000 ‘Add deposits in transit, Dec. 31 38,000 December receipts per books Bi24.000 Question No. 3 ‘Total charges per bank statement 96,000 Less: Outstanding checks, Nov. 30 28,000 Correction of erroneous bank credit 10,000 December NSF check 8,000 December bank service charge 400 46,400 Dec. disb. cleared through the bank 49,600 ‘Add outstanding checks, Dec. 31 30,000 ‘December disbursements per books P72.000 Question No. 4 Balance per books, Nov. 30, 2010 ‘Add December receipts per books Total Less December disbursements per books Balance per hooks, Dec. 31, 2010 43 i Y 7 us yon ons ca BR I1- Audtit of Cash and Cash Bexivatents 1 much is the ed 12/31/10 P164,000 Seggs te eee (Question. 7 ppank statement, 12/ 38,000 & 3.605) é Pigg aa in cat fama juste 7 uch is Pra 12/1/10 Bizz.009 2 Serpass tan tet ake restr Jay? Adjusted: 2/31/10 P180,400 lao we Past ger tak I (8,000) NSF one charges Eig 4. How much is the adjusted cash balance as of July 31? 37,817 & Pzas13 vb PL12,335 d) 120,585 ae @ tte 5. How much is the cast shorage as of July 31? eas a. P 8,250 & P196,144 b. P71,815 (jp "0 ‘Cash account belance _ ‘Bank statement balance Answers: 1) A; 2); 3) B; 4); 5)D Outstanding checks ons ‘Suggested Solution: ty 10, ‘returned by bank on July 16 marked NSF, ‘Muntinlupa Company ‘Ei redeposted mediately: no entry made Reconciliation of Receipts, Disbursements, and Bank Balance ‘on books for retum or redeposit 8,250 Por the month ended July 31 CSC OY bank OCEAN 71,815 80,900 ot ates recervabhe Beginning Receipts Disb, Ending June 30 July July 3! ‘Tee benk statements and the company's cash records show these Be .ce per oe ‘statement P107,082 249,108 218,373. P37, Disbursements in July per bank statement 218,373 Deposit in Caste cs in July 4 i Receipt ly per Muntinlupa’s books 236,452 rena ‘30 201 (e200 Quesnons: July 31 12,880 12,880 Dared oa the Outstanding Me appicaton of the necessary audit procedures ani a paesie: ‘above data, you are to nrovide the fers to the June 30 (27,718) 7.718) a July 31 30, ‘ “4 Say 1- Audit of Cash and Cash Equi Ault . 7" . a 4 Additional data are given ag NSP check 8250 18.250 ‘a. Company enn Den juoed bork ar sgs | BRASS BRIRGIT Plz sas Total checks drew name P165,000 } “a 98,000 - b. Bank statement totals for December : p1se2 -P236,452 P212,529% 39,745 a December . ae enice oa ‘ Credits 123,800 | bs Check no. 1159 dated Ne ners a o : loveriber “te ie @ ies ou nb gt elem 08 cao ote ” checks returned by the bank, the actual amount of the check was 7 a 13 dated De te 815 (71,815) eee say. mss 0500 80.800 late check ae GT ane 0 tae to replace cd bok 7 reek ened eer “atnnce pense; EldSS27 EAIZSIZ B1Z0.sa5 €. The December bank statement included a check drawn by Sipag Company forP1,500, « Gn Oy Undeposite collections on December 3, 2010 P8,008. Ory ‘The service charge for: December was £15) which Was charged by the bank to another client. ‘The bank collected a note receivable of P7,000 on December 28, 2010, but the colleetion waa not received on’ time to be recorded by Pasig 4 (p137,817 + P218,373 ~ P107,082) slong © 236452 - 799,745) PROBLEM NO, 11 - Proof of cash; Computation of unadjusted and adjusted batanres F tn the audit of Pasig Company's cash account, you obtained the following information: i. The outstanding checks on December 31, 2010, were: Check No. Amount Check No. Amount 2910 2,300 as 2856 1,300 2925 4,100 ‘The company's bookkeeper prepared the following bank reconciliation as of November 30, 2010: QUESTIONS: Based on the above and the remit of your audit, determine the following: +. adjusted cash balance er poo as of December 31, 2010 Perc = ¢. P144,900 @. P16S.700 46 pale Audit of Cash and Cash Beuivalente ‘November 30, 2010 naj cash balan 08 ‘SF e00 s oe ee eT ime 7 ais - 201 90,800 i for December 2 10 3,000 a 5 169,000 P123,800 P136,000+ ‘e. P170,500 d. P173,000 November 30 5,000 (5,000) 182,000 - eceanins mo 8,000 8,000 for December 20 tatanding check: , 4 Adjusted bank aleburvemen ‘c. P125,150 ‘November 30 (82,000) (32,000) ‘a P120,150 150 December 31 7,700 (7.700) bP 76,150 : Bank errore Dee. : ‘Check of Sipag. 5 ‘dja can balance an of December 3 37800 BSC charged to ee aa 132/650 another cli & P137,650 ia Fst ee Adjusted bank —_— — — — balance Boagoo pizz.co0 P9sl50 plaZ.6s0 “Answers: 1); 2); 3); 4); 5)B Belance per books P77,900 P173,000 98,100 Customer's note i collected by bank: ‘Suggested Sottion: November 000 (8,000) December 00 7,000 (Quentin He. Bank service charge: Unadjusted book balance, 11/30/11 77,900 November (200) 08) ‘Add unadjusted book receipts: December (150) Collection from customers 165,000 een Note collected by bank in Nov. de on PMIBEM Pred in Dec 8.000 173.909 Lee (27,000) (27,000) ‘Less unadjusted book disbursement an Check oy esa en oT) agence 500) _____ _____ _s00 ov. presumed recorded in Dec. ‘Unadjusted bok balance, 12/31/ 1 ——loe aa balance Pe3.800 172,000 R985 P137.650 Question Nos. 2» (90,800 100 ~ 123,800) ‘Account Name: Ser Jun Company Date Debit ‘August 9 ae Candia ‘August 12 140 ow ~~ pal a 1,000 vagust augue 27 he 14,000 August 100 ac ‘August 31 eee Lt ‘August 31 300 Dar ‘S¥~ Seve Charpe; Dit Dob Meme, ‘BC Ero Comet at-Grat Mas ‘The paid cherks accompanying this bank statement fell clearing in ‘August) were (checks Usted in ender f payment by teak No. 450. 1,800 No. 455 P1,000 No. 458 P1440 451 1400486 700459 1,820 434 ‘690 ‘The check register revesed that the last check issued in August was ‘no. 460 for P1,000 and that check no. 457 was for P2,400. Cash received for the period August 2) through 31 of P9,400 was ‘Aeposited in the bank on September 1. immediately redeposited without entry. The check retumed on August 31 was redeposited by the client in'the bank on September 1 without enty. QUESTIONS: Based on the application of the necessary audit procedures and appreciation of the aborc data, you ae to provide the answers to the following: 1. How much is the unadjusted ioocic receipts in August? a. P25,140 e. P42,400 b. P35.540 4 P43,300 Y ei juoes rpms in Aug? Audit of Cash and Cash Bqvivclets F uch is the PB 2 Boe .460 4. 78,360 3 Question Nos. 3 5 760 San J naa nd eosin ALE? efecaze ae pas00 4 For the month ended August 31, 2010 B rot00 . sto Bevinning Receints Disb Ending a i Aug. 3) 4: eu nt utd tok sung Au Balance per bank sh Acust ‘ug. ; . PB ’ nlance per = & Bae a § Deposits in transit: 000 25,140" 9,740 P67, 400° ° July 31 a «ea balance as of August 31, 20107 (600) 5. How mache adjusted cash balanc 973,060 oni 9.400 o00 * d. P73,2¢ ‘July 31 aa b, P73,400 peace 100) (4,000) (check nos. 436, D, 4A; 5)D $57 and 460) “Answers: 1) C; 2) 4; 3) Erroneous bank 3,600 (3,600) debit, corrected 1 ‘Suggested Solution: NSF-check (100) (100) 3 Tedeposited —— _ 1140) 140) ‘Question No, 1 Adjusted bank ae ‘August collections credited by bank (P10,000 + P14,000) P24,000 balance P4800 35.400 P00 eza.2n0 ane Balance per books 40,000 42,800 PB.460P73,9404 Y Customer's note collected by bank. July 8,000 18,000} Unrecorded depotit in July 1,000 1,000) Bank service charge: July (100) (100) August 440 (440. NSF check not redeposited - Aug. — 300 (300; om pagan pad) PROD ETL » Total debits per bank statement «© (P52,000 + P2S,140- P9,740) (Pan. + Pag 400 72.460} em fy Koray nse "meinarang mt funn ves 0-19 dn of cust Dalanes tom ol + ant pasvset 00 Oe becenber Ig te a month of December 2010 mre ands . ecm it senior for the a ¥ t os aut gitar? i. 4 aah dispuremen es {bao Company at bt, oe a b a a i " i a 10417 a below: ted wae ene = Biss ‘alan tee 96800 CM Note PS bg 2 i fee 8 Less: DM bank am 2B 36,000 outstanding “ = 40,000 at: epost 714,800 ou fe 2 — = Pn 276 a ‘440.800 48,000 1 Room 4 is: Soin Based 08 16 euhlication of the weceseaty audit procedures sod Decal 4 porracetin tt is Gass yom us coe Oe mens te P1000) te neo P7,200 40,000 = “ee 48,000 1. Hw aroch inthe otwanding chee oo of Doentr 31, 20807 z r r a. 208, . ae =e pMo7 400,000, b. P232,800 & Fano bose ‘ noe 86,000. a om such isthe jute book recent fy Osea 2010? D 7 & baes.ae0 4. 1400 eomber 21 64,000 aly Poon = 20000 3. How much is the adjunsed bank disbursements ie Decnber 36,000 ‘ - = 00 ao . = a. calle 552,000 7939,260 curs oar ASS 542.400 2,000 Diener egay Aceon by a — of December 31, 2 ee sajnted oth DOE 05,800 010 i son 672,800 a PGGA.000 b p580.00 he a pros) 2185 9B A) SIP sages Soar one iber 31, 2010 standing checks, December 31, Pina 276,284, ee es, 288,290, 292, 293 and 294) B216.800 Question Nos. 2105 Proof of Cash For the month ended Dec. 31, 2010 Beginning Receipts Disb, Ending ‘Nov.:30 ecember Dec. 31 ea 808,000" statement 96,800 842,400 131,200 PB08, Meembe 30 «18,000 (8,000) December 31 88,800 88,800 one — (86,000) (16,000) December 31 — 216,809 (216,800) ‘Adjusted bank to) ag.g00 913,200 P332,4u POBD.000 Balance per books 58,640 P881,120% 304.000 P635,760" ‘Unrecorded CM: 881,120 Fl 5 Novemter c ered 10.320 (40,320) oe 64,000 foe Receipts Disb, Ending ‘Bank service charge: December November t Bex. 31 AF eae a (160) DAIF check - Dec, 00S Book errors: 60000 Understatement of OR no. 419 (72.400 - 72,000) Underfooting of CRI 400 ny (P448,800-P840.800) Overfooting of CDU 8,000 BOD {P288,000-P304,000) / Adjusted book” — __ e007 _ 16.000 balance ' _— ae + (P96,800 + P842,500- 133,200) » (P40,320 * P409,000 + P440,800) « (P56,840 + P8B.120 + P304,000) PROBLEM NO. 14 ~ Proof of casi, Cor ‘outstanding checks a (000. Doe ee ete tbc th the bank 4 ae 9200 STU owe ke cance "RY eee ih 8 ft espa although the bana ee eet etaeimen ee ' a eck be FSI ET — ‘December 08 P39,600- = QUESTIONS: the necessary audit procedi é fon of au tures ect on te septation, ou are (© provide the anwers tothe Siewe 2. How much is the outstanding checks as of December 31, 20102 ‘a PI91,960 ; 361,960 397,600 4. P363,160 3. How much x the 216,000 256,000 b. P431,600 ‘How much is the adj : a. P525,640 mused cash balance as of December 31, 20107 b PisseaD © P220,000 a. P375,640 58 -— manager rd ~ a i aaa 1 question Hos. 310 6 perbank — 56,000 416,000 P204,000 P518,000* statement epost in tran 30 20,000 (80,000) . ree 219,600 219,600 outstanding checks: 0 (170,000) (170,000) porn 361.960 (261,960) rrone bank Tut November _49,000 (40,000) _ adjusted bank alance yass.0o0 B5L5.000 Balance per books ¥157,200° 735,600 407,200 Customers note collesed by dank-November 100,000 (100,000) 60 deposits in transit 4 ier approach, the and rea aeratly (2PCHD Spr 3, 2010 cane comeied by working 1 Audit of Cash and Cash Bau u Riek, = Exaing Bank service Neng Desemir Deal (1,600) Book errors - 24,000 (24,000) Error in (120,000) (120,060) ‘Adjusted book — —— test —asew 256.000 P515.600 p395.960 B375.649 * (P306,000 + P416,000 - P204;000) ' (P4BS,600 + 407,200 - P735,600) PROBLEM NO. 16 - Proof of cash; Accounts receivable hypothecation; ‘Computation of adjusted balances ‘pee You were able to obtain the following information in connection with your audit of the Cah ascount of the Pasay Company as of December November 30 December 31 a. Balances per bank 'P480,000 420,000 b. Balances per books 504,000 $39,000 ¢. _Undeposited collections 244,000 300,000 350,000 129,000 fe. The bank statement for the month of December showed total credite of P240,000 while the debits per books totaled P735,000. 61 11- Audit of Cash and Cash Beuivnteras * Collections on accounts receivable deposited in December, other than deposits in transit, totaled P725,000 k. Interest on the bank loan for the month of December charged the bank but not recorded in the books, amounted t P38,000. 7 QUESTIONS: Based an the above and the result of your audit, answer the following: 1. How much is the adjusted cash balance as of Novernber 30, 20107 a P574,000 c 430,000 b. 394,000 4 330,000 2. How much is the adjusted book receipts for December, 20107 a. P860,000 © PR76,000 b. P280,000 d. P296,000 3. How much is the adjusted book disbursements for December, 2010? P180,000 ¢ P180,000 bd. P905,000 ad P760,000 4. How much is the adjusted cash balance as of December 31, 20107 a. P690,000 ce Pec O00 b. P530,000 a& PH90,000 5 How much is the cash shortage as of Decenber 31, 2010? a P32,000 ce. P8,000 b. P90,000 a P o Answers: i}, 2) A, 33D, 4) B.D Suggested Soluton: Pasay Company Prev of Cont For the month ended December 31, 2010 63 11- Audit of Cash and Cash Equivalents (000 300,000 240, 6 30 490,000 100,000 x 80%) 80, 100,000" {100,000} eo 80%) ~ . 140,¢ (P140,000 x. (150,000 de ton ia Des. cient , in (190,000) 120,000 Adjusted book ——+ 28,000 138.009 (20,000) ‘balance 430.000 Ba60.000 b760.000 ‘PR0.000 + (480,000 + P240,000 ~ 420,000) » (P504,000 + 735,000 - P539,000) €{P244,000 ~ (P180,000 x 80%) 41P300,000 — (P200,000 x 80%) PROBLEM NO. 16 - Cash flow computations » 504,000 P735,000 P700,000" Jn connection with your audit, Quezon Metals Company presented to ‘you the following information: (10,000) 10,000 Quezon Metals Company ‘Comparative Statements of Financial Position 25,000 25,000 December 31, 2010 and 2009 29,006 2010 2009 Assets: Current Assets: 106,000 Cash P 476,000 P 392,000 Available for sale securities 236,000 - Accounts Receivable 1,248,000 1,016,000 Inventory, 1,112,000 956,000 Prepaid expenses 140,000 __34,000 (144,000) 144,000 Total Curvent Assets 3.212.000 12,448,009 {160,000) Property, plant, and equipment 2,144,000” 1,636,000 7 Accumulated depreciation Total Assets 6 160,000 1,400,000 7,096,095 500,000 Metals Company oor Nese Income Stateraenta F conan Ended December 31, 2010 and 2009 or 2010 2009 P 14,244,000 P 13,016,009 Net sales -11.156,000 10,272,009 ont of Gone Sid 3,088,000 ~ 2,744,009 oes Pro 2,084,000 __1,944.090 = oma B1.004.000 P_800,000 ‘Additional information for Quezon: (2) Al accounts receivable and accounts payable relate to trade merchandise. {bj The proceeds from the notes payable were used to finance plant {e} Share capitel was sold to provide additional working capital. ‘QUESTIONS; Based on the above and the result of your audit, compute the following for 2010: 1. Cash coliewed from auounia eceivabic, ussuuung ali sais are on fccount, @ P14,012,000 ©. 14,476,000 3. F 796,000 ay 0 2. Cash payments made on that all purchases of inventor wt PAVable to suppliers, “Ol cee oe eee b. P11,212,000 ©. P10,944,000 & P11,256,000 3, Cash payments for dividends, P 828,000 2 aoc b. P1,020,000 tee 4, Cash receipts that we . a. P192,000 Te not provided by operations, b. 500,000 & F700,000 5. Cash payments for assets that reflected in operations a. P1,412,000 ae 508,000 : bP '744,000 4. 1,176,000 Answers: 1) A; 2)D; 3); 4); 5)B ‘Suggested Solution: Question No. 1 Accounts receivable, 1/1/10 P 1,036,000 Add sales for 2010 14:244'000 Total 15,260,000 Less accounts receivable, 12/31/10 _1248,000 Cash collected from accounts receivable Bis.012,000 ‘Question No. 2 Accounts payable, 1/1/10 P 792,000 ‘Add purchases for 2010: Cost of goods sold for 2010 P11,156,000 Add Inventory, 12/31/10 2,000 ‘Total goods available for sale 12,268,000 Less Inventory, 1/1/10 956,000 1,312,000 Total accatnts tn he paid 12,104,000 Less accounts payable, 12/31/10 848,000 Casi pavments made on AP Pi1256.000 67 ned 3 P 576, Sales Debit Sredit ee sine) 180 L093. Purchases 9,000,008 pecs err 2010 1580-08 Expenses (i depreciation ot 8,600,000 ‘ad net 10 752i P100,000 and accraee ‘pol ings, 12/311 3 30,000) ‘expenses of Pa eae! te 828 ee wa ident gidends eae > (QUESTION: inerenmats fr dindend Fe8.099 poem ‘The cau in bank balance at December 31,2019 is 4 x . P690,000 rom tes aye 500,000 »- Ps60.000 4. 790,000 Proceed rom Fpsuaice of sare capital ; Peer -72.200000) ng ~200,000 oe 400 red BY of oan ia from financing) 209.009 ‘Suggested Solution: Proceeds from issuance of share question No.5 . Collections from accounts receivane 1,400,000 purchase of avaiable for sale securities 236.000 Collections from subscriptions receivable 1,000,000 Purchase of PPE (P2,144,000 - P1,636,000) 508,009 Proceeds from bank loan Cash peymenta for easets that were not Cash receipts tegn.ong ot vara wn eperaboa P743,009 Lees cash disbursements: Funding of petty cash P 40,000 Purchase of delivery equipment 1,000,000 a. tion of cash in bank balance Payment for accounts payable 5,600,000 PROBLEM HO. 17 - Computat 7 Payment of bank loan 700,000 Cash in bank balance of Novaliches Co. on January |, 2010 was Payment for expenses: 1,400,000 representing 35% paid-up capital of its authorized {P1,800,000-P100,000-P30,000) 1,670,000 9,010,000 capital of 4,000,000. Dunng the year you ascertained the fol Cash in bank, 12/31/10 £790.00 pottings o some accounts, as follows: ee Detat Credit PROBLEM NO. 18 ~ Computation of cash flows and shortage P 40,000 Account receivable trade 9,000,000 P5,800,000 — The Valenzuela Corporation was organized on January 15,°2010 and Subscription receivable 1,200,000 1,000,000 started operation soon thereafter. The Company cashier who acted also equipment 1,000,000 the bookkeeper had kept the accounting records very haphazardly. Dead fan ae trade 5,600,000 8,600,000 ‘The manager suspects him of defalcation and engaged you to audit his Bank loa 700,000 1,600,000 account to find out the extent of the fraud, f there 18 anv. Subscribed share capital 30,000 Uniaeued share capital 1,200,000 ‘Autherded share capital 2,600,000 4,900,008 70 me y started wie easmunation a be P25,700, From inquicy, the ie balance of the Company’ at ¢ date was P131,640. Vente 79,260 is not yet Naid by gttion (or above cost. 1- Audit of Cash and Cash Bquivalents 5. Cash shortage bang” aera ©. P859,100 "y a * ap ° son o we avaible record disclosed ay fe Answers: 1) A; 2)B; 3) 0; 4)D; 5) 8 dat par for cash P1660, ‘Suggested Solution: Loo gd ¢ ‘Question No. 1 ‘Sales P1,615,040 ‘Less accounts receivable, 11/15 426,200 Collections from sales PL188.140" ly Question'No. 2 is 900 Cost of sales (P1,615,040/1.4) P1,153,600 I of merchandise on November 15 at cost 465609 aa tes ie P69 600 Expenses paid excluding purchases 303,78) Purchases 1,623,200 ‘Less Accounts payeble, 231.420 ‘QUESTIONS: Payments for purchases PLAQLLEO Based on the above and the result of your audit, compute for gy Question No. 3 following as of Novernber 15, 2010: Porelvese of real ¢stata’ 1,000,000 ‘Payment for furniture and fixtures oe (P145,000 - P30,000} ead a x 615,04 Expenses paid d. P2,041,940 Payments for purchases (see no. 2} _1.391.780 cash di ents 2.810.580 2. Payment for purchases Total cash disburseme i a wae c. P1,207,204 Question No, 4 a eee d. P 922,180 Proceeds from issuance of share capital San, o00) 3 Total cath disburseme Proceeds from mortgage note payable 160,000 & 12,240,969 Proceeds from notes payable - bank . 3,273,400 c. P2,810,560 Collections from sales (eee no. 1) 3,348,140. 4. P2,625,984 Total cash receipts aS 4 Unadjusted ‘Less cach disbursements (866 19. 3) Posazseo oP 74740 balance ‘Unadjusted cash balance 722.156, ©. 1,007,180 dP 537.580 Tees nm te deposit slips, all dated January, P44,000. > pa dun ST got representing collections on a . Cash book balance at December 31, 2010 amounted to P186, representing both cash on hand and cash in bank. — 4. Bank statement for December showed a balance of P170,400. © Outaanding checks at December 31: , No. 331 P2,400, bad 6,600 339 1,600 345, 20,000 11- Audit of Cash and Cash Equivalents 6 An amount of REGO presenting Proceeds of a clean draft on a SCersany's beaker att? by bank, but is not yet taken up in the th, Bank service charges for December, 400, ‘The company cashier presented to you the following reconciliation statement for December, 2010, which he has prenered “ Balance per books, December 31, 2010 Add outstanding checks: P180.600 No. 331 339 4 3S, 2,000 353 3,600 364 4900 _10,600 Total 791,200 Undeponited sletona aa Undeposi 120.400, Balanice per bank, December 31, 2010 p1z0.490 (QUESTIONS: Based on the above and the result of your audit, answer the following: 1, How much is the adjusted cash balance as of December 31, 2010? a. P152,800 ¢. P180,200 b.. P144,400 ae 0 2. How much is the cash shortage as of December 31, 2010? a. P45,600 G. Overstatement of undeposited collections by P400, 73 y-Audt ee 2); 3); 4) A Answers: 1) B Solution: suggested 1and2 ions No. Unadjusted balances < P170,400 Aa deduct) adjustments: (46,000) utstanding checks: 20. Undeposited collections id u ded bank collection Banik service charge 144,400 Balances , Shortage See aces b144.400 Question No, 3 Collections per records Add undeposited collections, Dec. 31 Total cash that should be deposited in January Less January deposits Undeposited collections, Jan. 15 Less undeposited collections Per cash count Shottage, Jan. 1'to 15, 2011 Question No, 4 CL age (P186,000 PI so eocmiance “en es P20,400" Pao peppesited collections *: December 31, 2010 74 P75,200 beta P 4,400 5,400 35,400 Ue UI - AUDIT OF RECEIVABLES PROBLEM NO. 1 - Classification of receivables Your audit disclosed that 7 receivable control account Senco 2010, the 2,865,000. An analysis of the accounts rece’ accounts pany had a balance of ivable account showed the following: Accounts known to be worthless. P 37,500 Advance payments to creditors " Advances allnted companies, Pemmrorere 450.008 eee reporting credit balances arising , ZS z (225,000) Afiterest receivable on bonds. 150,000 Other trade accounts receivable - unassigned 750,000” Subscriptions receivable due in 30 days 825,000 ‘Trade accounts receivable - assigned (Alilem company’s equity in assigned accounts is P150,000) 375,000 — Trade installment receivable due 1 - 18 months, anh IH - including unearned finance charges of P30,000 330,000 Trade receivables from officers due currently 22,500 ~ ‘Trade accounts on which post-dated checks are held (no entries were made on receipts of checks) __75,000 ~ QUESTIONS: Based on the above and the result of your audit, determine the adjusted balance of following: 1. The trade accounts receivable as of December 31, 2010 is a. P1,147,500 c. P1,485,000 b, 1,522,500 d. P1,447,500 2. The net current trade and other receivables as of December 31, 2010 is . P2,647,500 a F b. P2,610,000 d. P1,822,500 81 Trade: i 1) counts receivable (see No. rasce pavments to creditors on purchase orders, Interest receivable on bonds ; Subseripuons receivable, due in 30 days Cunent trade and other receivables Question No. 3 ‘Advances to affliated companies Note: Advances to affiliated companies are normally presented under” roncurrent assets. ‘PROBLEM NO. 2 - Computation of adjusted trade receivables, A allowance for doubtful accounts and doubtful accounts expense peur Audit of Banayoyo Corporation for the year ended Devemiver 31, Tomes at the Accounts Receivable account consists of thd 82 P3,440,000 ‘Uncollectible accounts: faetooo Gredit balances in customers’ accounta Notes receivable dishonored 340,000 Consignment ‘shipments ~ at cost a40000 ‘consignee sold goods. costing P160,000..A 10% comminson ts Saco y the ‘consignee and remitted the balance to Banayoyo. The cash was received in January, 2011, 320,000 Total . QUESTIONS: Based on the abové and the-result of your audit, determine adjusted belance of folowing: ahaa! the ‘a. 4,080,000 c. P4,464,000 b. P3,440,000 d._ P3,S84,000 2. Allowance for doubtful account a. P204,000 < P172,000 b. P216,000 d P179,200 3. Doubtful accounts expense a. P264,000 c, P252,000 b: P220,000 d P227,200 Answers: 1) C; 2) B; 3) A ” pen ee SO question 1 P3,440, Be wn en 40.000 " Ide ade ACCT a 240,000 Par eceatle eady 201d {7160,000x.90%) 144.999 3 grad nia pege receivables Pesotony cueton to? 4,464,000 je eae reat 154,009 basi oe wane Mor doubtful accounts 4320.00 j Basis 48 But vance fr doubt accounts aie { question Ho 3 wubtful accounts 216,000 Required allowance for do af 128. A rot cee accounts 128.000 4 owance account before adjustment 80,000 Dnt 264.000 ‘Doubiful accounts expense PROBLEM NO, 3- Avi of bad debt reporting Presented below are a series of unrelated situations. Answer the following questions relating to each of the independent situations as requested. 3 1. Bantay Company's unadjusted trial balance at December 31, 2010, included te ellowing accounts: Accounts receivable” PL, 000.5 300 = Allowance for doubtful accounts ‘40,000 3 15,000, Seles Sales returns and allowance Bantay Company estimates i net ita bad deb sl Denied debate oxen to be 3 1/24 700,000 a 1- Audit of Receivables ¢. P214,500 a. 225,000 b. P254,500 d. P 55,000 2. An analysis and aging of Burgos Corp. accounts receivable at December 31, 2010, disclosed the following: ‘Amounts estimated to be uncollectible P 1,800,000 17,500,000 1,250,000 ‘Accounts receivable . ‘Allowance for doubtful accounts (per books) is the net realizable value of Burgos’ Feceivables at December 31, 2010? & P1,700,000 c. P16,250,000 . P17,500,000 d._P14,450,000 3. Cabugao Company provides for doubtful accounts based 396) of credit sales. The following data are available for 2010. Se Credit sales during 2010 21,000,000 Allowance for doubtful accounts 1/1/10 170,000 Collection of accounts written off in por years (Customer credit was reestablished) 80,000 Customer accounts written off as uncollectible during 2010 What is the{balanc3 in allowance for doubtful accounts at December 300,000 31, 20107 — a." P630;000 c. PS00,000 b. P420,000 @.P580,000 ‘At the end of its first year of operations, December 31, 2010, following information: ‘Accounts receivable, net of allowance for doubtful accounts 9,500,000 Customer accounts written off as uncollectible during 2010 240,000 Bad debts expense for 2010 840,000 the balance in accounts reveivable ai Deveuber 31 subtracting the allowance for doubtful accounts? ,000 . P 9,740,000 a. P10,580,000 ts were TAKES oes Mee TOTES En iy U1- Audit of Receivables porns ME December 31, 2010. Question No, 4 ate postion Debit > tose 4,100,000 avable "100/000 Bad debt expense for 2010 840,000 pest i eens “Gangstas se we . Allowance for doubtful accounts, 12/31/10 beg0.000 Net re 3% of accounts receivable, deter ef) accounts ar reported for 2010. Accounts receivable, net of allowar sc for doubtful deg expense 10 BE c. 223,000 accounts P 9,500,000 vel ood 4. P225,000 Allowance for doubtful accounts, 12/31/10 "600,000 2 3000 Accounts receivable, before deducting allowance b PB for doubtful account B10..00.000 Ae a; 31D; 4) paves 16 Sagested Sotion: F 18 were from © Sales returns in 2010 amounted to P#00.900. All return: charge sales. og necevaes to P44,000 were written op aa ts totaling ing the year amounc” F 0, accounts (Orenes AUN Outed : + puring 2010" 5 debt « eecile ; $000. seats i ated so tna epresnta ints recei ‘year 1 re aware ara ooo 29 9 Ja 150% of Ue rate percent ent ee 3, 209 n. ove and the result of YOUF audit, answer the folowing Based on he ivable ‘as of December 31, 2010 is Tao ce. P 333,333 tomo 4. 2,444,000 b, P 300, ; accounts as of December 31, 20104 2 te allowance for doubtful \ccour lator ‘ PEE aso" 7 4, te ect razable value of accounts receivable as of December 3 c. P2,874,000 d. P2,291,360 ‘account expense for the year 2010 is . P 21,000 d. P147,640 M- Auatt of Receivcbles Question No. 2 ‘Accounts receivable, 12/31/10 Mattpiy by bad debi ate” {{P40,000/P1,000,000) x 1.5) Allowance for doubtful accounts, 12/31/10 Question No. 4 Allow. for doubtful accounts, 12/31/10 Pi fda accounts writen off vtec09 ‘Total 224,000 Less: Allow. for doubtful accounts, 12/31/10 40,000 Bad debt recoveries 3.000 43,000 2181.00 Doubtful accounts expense for 2010 PROBLEM NO. 5 - Analysis of accounts receivable and related accounts In your audit of Lidlidda Plastic Products Co., you noted that the company's statement of financial position shows the accounts receivable balance at December 31, 2009 as follows: Accounts receivable 3,600,000 Allowance for doubtful accounts 72.000 FS.32B.000 During 2010, transactions relating to the accounts were as follows: ‘+ Sales on account, P38,400,000. © Cash received from collection of current receivable totaled P31.360,000. efter discount of PSA0.000 were allnwed for prompt Payment. Customers’ accounts of P160,000 were ascertained to be worthless and were erittgn aif 89 1 Aut of Recetraban ee eacusty written OF PHOT 10 2010 ee ‘Suggested Sotution: ped rs recovers provide P184,000 for doubetyy eat aecided Jat the year Question No. 1 oe com ey at One 000 have been pled, Accounts receivable, 12/31/09 paren 7 ante of P5.600.000 toons of PI,d00 ‘Add: Sales on account | 3,600,000 receiv3,200,000- 7 mee Bad debt recoveries ‘38,400,000 Accum pan of PS.AUE included in the collection, Total 48.900 he receiv tial ‘payment to the loan, Less: Current receivables collected, 42,040,000 paints ‘rama es ; 360,000 + P640,000) _P32,000,000 questions audit, answer the faog | Bad debt reanenen 160,000 and the result of Your f Baddebtrecovenca Sooee the above ~ 1s made Based oF yber 31, 2010 is | pledged aa collateral rye accounts receivable as of December oh ao Accounta receivable, 12/31/10 1.200.000 Ee [ masse 4. 78,640,000 Question No. 2 pe 3 All for doubth of Decembe! lowance for doubtful 12/31, sone ft aobetulaccounte aa of Deceer 31, 209 Add: Bad debt recovenea nn /S1/°? a one 21 Teale & pireo00 evan P™o® or doubt accounts 134-000 fie ; Less: Accounts written off e000 ble value of accounts receivable as of Allowance for doubtful accounts, 12/31/10 Ba36.000 4. The net reaizal c. P8,S04,000 Question No. 3 d. P4,104,000 Accounts receivable, 12/31/10 8,640,000 Less allowance for doubtful accounts, 12/31/10 "136,000 Net realizable value, 12/31/10 Bisot.000 Question Wo, 4 Receivables hypothecated or pledged against borrowings should be disclosed. PROBLEM NO. 6 ~ Analysis of accounts receivable and related accounts Cardi Corp. hns the following data relating to accounts receivable for Answers:1)D; 2) B; 3) C; 4) A the year ended December 31, 2010: ) 1 owanee ft dOurer lo i SH T15 2150, atorers during the Year 2,560,009 Cash ce ‘off during the year 600) a vm customers during the year revealey_ ais of cash i ‘Ti Sat FLAT 2 tomers availing the 15-day diseoy discount period, P77 reco - i ryano represents eetomere paying beyond the discouy balance ‘ding accounts receivable at year end, pase on the above and the result of your audit, answer the following: ints receivable at December 31, 2010 is + aD 7265.60 d. P302,400 2. The allowance for doubtful accounts at December 31, 2010 is ‘ ¢. P15,360 d. P13,520 ©. PB,720 d. P8,960 Answers: 1); 2); 3) 5 ‘Suggested Solution: ' wunts is adjusted so that it represents "31, 2010 is 125% of the rate used. ‘Accounts receivable, 1/1/16 ‘Add: Sales on account jaotpeo Bad debt recovery ot lo 7,884,800 Leas: Cash received'from customerst P2,560,000 Sales discounts - 10 days (1,411,200; 411/200, 28,800 (792,000/: 8,000 Accounte writ 17.600 _2,614.400 ‘Accounta receivable, 10 2270-409 * The bad debt recover iy included in ths amount. Question No. 2 Allowance for doubtful accounts, 12/31/10 (P270,400 x .05*) pia.sag * (P19,200/ P480,000) x 1.25) Question No. 3 Allowance for doubtful accounts, 12/31/10 P 13,520 ‘Accounts written off 17,600 Allowance for doubtful accounts, 1/1/10 (19,200) { 4,800) Recovery of accounts written off Doubtful accounts expense - 2010 Ez20 PROBLEM NO. 7 - Analysis of accounts receivable and related accounts You were uble to obtain the following information from your audit of Magsingal’ Corporation's Accounts Receivable and Allowance for Doubtful Accounts: © From the general ledger you noted that the Acc @ balance of P848,000 as of December 3) transcript of the Allowance’ for Doubtful Acco. Debit «Credit «Balance January 1 ~ Balance July 31 - Write-off P16,000 4,000, December 31- Provision 48,000 P52,000 93 en suns y ledger 08 of December 31, 2914 of the so . Bt 360,000 papier wet, 368,000 vt ox _ 152,000 Ore anon pas0.000 - Ok; additional billing in Jan,, 2935 cit sltO™ p 8,000 * Should have been credited Big 14000 > Stttcag on sales contract js not in agreement with the ag requested you to adjust the eq se custo) 1B after corrections are made, ok The client receivable cre subsidiary led Ber tor percent is adequate for accounts under at pe go sx months are expected to requ zi six months are analyzed . ais ered mont of 2 percent. Accounts Over follows: Definitely bad (estimated to be 50% collectible) : oon pod, but slow (estimated to be 90% collectible) ‘otal (QUESTIONS: Based onthe above ang the result of your audit, answer the follo 1. How much is the adjusted balance of Accounts Receivable a8 December 31, 2010? a~P818,000 Nissen cc. P832,000 a PAI6,0N0 94 ni - Audit of Receivables 2. How much is the adjusted balance ‘Accounts aa of Deceniber 31, 20107 ne Allowance for Doubehal a, P30,680 pause «Paseo 3, How much is the Doubtful Accounts a Prs80 t expenee for the year 2010? b. P75,240 & 74,760 Answers: 1) A; 2) A; 3) A ‘Suggested Solution: Question No. 1 ae pet ™ cot Unadjusted balances 4600 e860 SEndy

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