APPLIED AUDITING

ACTIVITY 9

Direction: Write here your solutions in post test. Show it in good

form.
PROBLEM NO.1
Solution
1. D
2. B
3. B
4. C

2004 2005 2006

A 9,000
(1,800) (1,800) (1,800)
B
C 112,000 (112,000)
D
E (120,000) 120,000 (120,000)
F _________ 144,000 (72,000)
Under/(Over) 7,200 134,200 185,800

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PROBLEM NO. 2

Solution
1. B
2. C
3. D
4. D

NET INCOME
2005 2006
A. Omission of purchases (12,000) 12,000
Omission of inventory 12,000 (12,000)
B. Omission of purchases (18,000) 18,000
C. (2,000)
D (5,000) 5,000
E (4,000) 4,000
F 600 (600)
G (2,400) 2,400
H (9,000) _______
(39,800) 28,800

OPERATING EXPENSES
2005 2006
A
B.
C. (2,000)
D (5,000) 5,000
E (4,000) 4,000
F 600 (600)
G
H (9,000) _______
(19,400) 8,400

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PROBLEM NO. 3

Solution
1. B
P 60,000 x 15% = P 9,000

2. C
P 60,000 x 15% x 2/12 = P 1,500

3. B Given in item A

4. C
Retained earnings 3,000
Wages expense 3,000
Wages expense 11,000
Wages payable 11,000

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PROBLEM NO. 4

Solution
1. B
2. A
3. D
4. A
2003 2004 2005
Unadjusted Net Income 127,000 150,000 128,500
A 14,000 (14,000)
(23,000)
B 15,000
C 4,000 (4,000)
5,000 (5,000)
3,500
D (10,000) 10,000
(14,000) 14,000
E 13,000
F 5,000 (2,000)
G 14,000
___________ ___________ (1,400)
Adjusted Net Income 121,000 179,000 129,600

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PROBLEM NO. 5

Solution:
1. C
Accounts receivable, 12/31/06 P 4,000,000
Add collections from customers 10,000,000
Total 14,000,000
Less accounts receivable, 1/1/06 6,400,000
Net sales for 2006 P 7,600,000

2. A
Unpaid merchandise invoices, 12/31/06 P 2,621,000
Add payments to suppliers of 2006:
Total payments to suppliers in 2006 P 13,618,000
Less payment in 2006 to suppliers
of prior years 4,632,000 8,986,000
Net purchases for 2006 P 11,607,000

3. B
Accrued wages, 12/31/06 P 125,000
Add wages paid in 2006 3,050,000
Total 3,175,000
Less accrued wages, 1/1/06 85,000
Wages expense for 2006 P 3,090,000

4. A
Accrued advertising, 12/31/06 P 40,000
Advertising supplies inventory, 1/1/06 35,000
Advertising paid in 2006 300,000
Total 375,000
Less: Accrued advertising, 1/1/06 P 14,250
Advertising supplies inventory, 12/31/06 75,000
Advertising paid applicable to 2007 40,000 129,250
Advertising expense for 2006 P 245,750

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