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

9) Sales per book 4,820,000

Unrecorded Sales 31,810
Unshipped Goods (52,830)
Adjusted Sales 4,798,980
9) P 4,798,980 - B

10) Prepayments per Book 438,000

Advertising Expenses ( 144,000 x 5/12) (60,000)
Rent Expenses ( 165,000 x 2/3) (110,000)
Office Supplies Expense ( 129,000 - 53,200) (75,800)
Prepayments per Audit 192,200
10 ) P 192,200 - D
 Solution to San Mateo Trading
Audit Problem

11) Total Cost of PPE per book 3,045,000

Additional Charges to Computer bought
( 12,500 + 11,300 + 6,520 ) 30,320
Unrecorded cost of Delivery Equipment
( 1,000,000 - 200,000) 800,000
Adjusted Cost of PPE 3,875,320
11) P 3,875,320 - D

12) Total cost of PPE 3,875,320

Accumulated Depeciation:
Per Book (936,500)
Depreciation - Leasehold ( 363,000/5 x 3/12) (18,150)
Depreciation - Computer (325,000 + 30,320/4 x 7/12 (51,818)
Adjusted Net Book Value 2,868,852
12) P 2,868,852 - B
 Solution to San Mateo Trading
Audit Problem

13) Accounts Payable per book 523,100

Unreleased checks 115,000
Understatement of book disbursement ( 21,000 - 12,000) (9,000)
Unrecorded purchases 215,000
Accrued Expenses included in Accounts Payable (37,450)
Cash advance to President (350,000)
Advance payment of goods ordered deducted from A/P 87,250
Adjusted Balance 543,900
13) P 543,900 - B

14) Accrued per Book 63,100

Accrued expenses erroneously recorded in A/P 37,450
Various accruals (21,200 + 18,150 + 11,990 + 3,180 ) 54,520
Adjusted Accrued Expenses 155,070
14) P 155,070 - C
 Solution to San Mateo Trading
Audit Problem

15) Security Bank Loans

39,193 X 183/215 33,359
167,149 X 107/182 98,269
93,000 X 26/120 20,150 151,778
Bonds Payable ( 1,200,000 X 12% X 6/12) 72,000
Interest Payable, Dec. 31, 2019 223,778
15) P 223,778 - D
OPEN FORUM
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