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You are auditing the financial statements of Savoy Company for the year ended December 31,
2021. The following information is related to your audit:
The cash in bank per ledger is P1,700,000 and the bank statement balance is P1,800,000. The
auditor found the following bank reconciliation items:
· Collection of customer notes with a principal amount of P250,000 and interest of P20,000
· Shipped goods to a customer amounting to P40,000 and costing P30,000 on December 30,
2021. Terms, n/30, FOB shipping point. The sale was recorded on January 5, 2022. The
goods were included in year-end physical count.
· Shipped goods to customer amounting to P80,000 and costing P50,000 on December 27,
2021. Terms, n/30, FOB destination. The sale was recorded on December 30, 2021. The
goods were excluded from year-end physical count.
· Purchased goods from supplier amounting to P60,000 on December 30, 2021. Terms, n/60,
FOB shipping point. The purchase was recorded on January 2, 2022. The goods were
excluded from year-end physical count.
· Purchased goods from supplier amounting to P30,000 on December 27, 2021. Terms, n/60,
FOB shipping point. The purchase was recorded on December 30, 2021. The goods were
excluded from year-end physical count.
Savoy has the following balances before adjustments: Accounts receivable, P800,000, Notes
receivable - trade, P600,000, Inventory, P1,000,000, Accounts payable, P950,000, Accrued
expenses, P140,000, Notes payable due on September 15, 2022, P650,000
Compute for the following:
2. Accounts receivable
3. Inventories
4. Current liabilities
5. Current ratio