Audit and Assurance

Concept and Application Part 1

By: NILO N. IGLESIAS, CPA, MBA, REA

This Photo by Unknown Author is licensed under CC BY-NC

Solution to
San Mateo
Trading

This Photo by Unknown Author is licensed under CC BY-NC

 Solution to San Mateo Trading
Audit Problem

Book Bank
1) Unadjusted Balance 681,200 984,020
Add (deduct) Adjustments
a) Erroneous credit (195,000)
b) Post dated checks (37,900)
c) Unreleased checks 115,000
d) Understatement of book disbursement
( P 21,000 - P 12,000) (9,000)
e) Unrecorded disbursement of check (4,750)
f) Unrecorded transfer of fund DBP securities (59,300)
g) Interest earned 5,720
h) Deposit I Transit ( P 89,200 - P 37,900) 51,300
i) Outstanding checks (132,000)
j) Unrecorded collections 17,350
Adjusted Balance 708,320.00 708,320.00
1) P 984,020 - A
2) P 798,320 - B
 Solution to San Mateo Trading
Audit Problem

Book Bank
1) Unadjusted Balance 681,200 984,020
Add (deduct) Adjustments
a) Erroneous credit (195,000)
b) Post dated checks (37,900)
c) Unreleased checks 115,000
d) Understatement of book disbursement
( P 21,000 - P 12,000) (9,000)
e) Unrecorded disbursement of check (4,750)
f) Unrecorded transfer of fund DBP securities (59,300)
g) Interest earned 5,720
h) Deposit I Transit ( P 89,200 - P 37,900) 51,300
i) Outstanding checks (132,000)
j) Unrecorded collections 17,350
Adjusted Balance 708,320.00 708,320.00
1) P 984,020 - A
2) P 798,320 - B
 Solution to San Mateo Trading
Audit Problem

3) Petty Cash Fund per ledger 35,000

Unreplenished disbursement:
Various Expenses 19,300
Advances to Employees 5,800 25,100
Petty Cash Balance, December 31, 2019 9,900
3) P 9,900 - D

4) Fair Value of Super Ferry Shares as of

12/31/2019 ; (5,000 x P 8.20) 41,000

4) P 41,000 - A
 Solution to San Mateo Trading
Audit Problem

Cost Market Value

5) San Miguel "A" (2,000 x 58.50) 150,000 117,000
ABC Bank ( 2,000 + 500 X 49.25) 110,000 123,125
Vitarich ( 5,000 + 200 X 9.10 ) 54,600 47,320
314,600 287,445
Unrealized loss on Non-Trading Equity
Securities ( 314,600 - 287,445) 27,155
5) P 27,155 - B
 Solution to San Mateo Trading
Audit Problem

6) Account receivable per book 1,452,700

Add (deduct) adjustments
1) Postdated checks 37,900
2) Unrecorded collection (17,350)
3) Customers deposit 38,000
4) Cash advances to Officer (75,000)
5) Unrecorded sales 31,810
6) PN received from customers (168,000)
7) Unshipped goods (52,830)
Adjusted Accounts Receivable Balance 1,247,230
6) P 1, 247,230 - B
 Solution to San Mateo Trading
Audit Problem

7) Required Allowance ( 1,247,230 x 2%) 24,945

Allowance balance per Book 10,200
Increase in Allowance for Doubtful Accounts 14,745
7) P 14,745 - A

8) Inventory per count 3,873,000

Goods in transit purchased FOB Shipping Point 148,000
Goods returned to Suppliers (41,700)
Consigned Goods received included in
Physical Count (89,500)
Adjusted Inventory 3,889,800
8) P 3,889,800 - C
OPEN FORUM
QUESTIONS????

REACTIONS!!!!!