PROBLEM 2 You are revisiting the audit working paper presented to you by your audit staff in line with his audit procedures done in auditing T-ara Corporation’s accounts receivable. The following were lifted from the said working papers: Audit notes: T-ara Corporation’s accounts receivable subsidiary ledger had the following details: Customers Invoice Date Invoice Amount Balance Park Ji-yeon Inc. 12/06/22 127,000 10/29/22 84,000 211,000 Hyomin Company 12/30/22 42,000 09/27/22 30,000 08/20/22 53,520 125,520 Hahn Eunjung Inc. 12/30/22 40,000 12/08/22 80,000 11/25/22 63,600 183,600 Park So-yeon Company 11/17/22 138,840 10/09/22 132,000 08/20/22 74,400 345,240 Jeon Boram Corporation 12/10/22 250,000 250,000 Qri Incorporated 09/12/22 104,400 104,400 Total 1,219,760 The accounts receivables balances were confirmed with the customers. You noted the following exceptions: Customers Balance per reply Remarks Park Ji-yeon Inc. 197,000 The invoice dated 10/29/22 was erroneously priced at P84 per unit. The agreed price per the customer’s approved purchase order was at P70. Hyomin Company 83,520 Invoice dated 12/30/22 was for a sale made on the same date. A significant clause in the sale agreement with Hyomin Company is to install the merchandise sold which the company yet to accomplish as of December 31. Hahn Eunjung Inc. 143,600 The difference was due to the invoice dated 12/30/22. Goods have not been received by Hahn Eunjung yet as of December 31, 2022. Term of sale is FOB shipping point. Park So-yeon Company 326,400 Credit memo for customer return for damanged goods worth P18,840 related to the invoice dated 11/17/22 was recorded in January of the following year. Jeon Boram Corporation 200,000 Invoice dated 12/10/22 was the sales price of 2,500 units of merchandise delivered to Jeon Boram on the same date on consignment basis. As of December 31, per Jeon Boram’s reply, 500 units still remained on hand. The consignment agreement provides Jeon Boram a commission of 20% based on sales. Qri Incorporated No Reply Qri is under liquidation and the amount receivable from the company is deemed definitely uncollectible. The balance of allowance for doubtful accounts at the beginning of the year was at P52,500. During the year, the company wrote-off P44,200 receivables and recorded P24,800 from the previously written-off accounts. The company policy with regard uncollectible accounts are summarized below: Age % of collectability 0 – 30 days 99% 31 – 60 days 98% 61 – 90 days 95% 91 -120 days 90% Over 120 days 50% Questions: Based on above and result of your audit, answer the following: What is the correct balance of the accounts receivable from Jeon Boram? Group of answer choices 200,000 160,000 120,000 100,000 What is the correct balance of the accounts receivable gross of any allowances as of December 31? Group of answer choices 1,004,520 900,520 950,520 870,520 What is the correct allowance for bad debts as of December 31, 2022? Group of answer choices 86,210 86,310 85,910 84,802 What is the correct bad debt expense? Group of answer choices 157,210 156,102 157,610 156,410 Please show solutions po.
PROBLEM 2
You are revisiting the audit working paper presented to you by your audit staff in line with his
Audit notes:
T-ara Corporation’s accounts receivable subsidiary ledger had the following details:
|
Customers |
Invoice Date |
Invoice Amount |
Balance |
|
Park Ji-yeon Inc. |
12/06/22 |
127,000 |
|
|
10/29/22 |
84,000 |
211,000 |
|
|
Hyomin Company |
12/30/22 |
42,000 |
|
|
09/27/22 |
30,000 |
||
|
08/20/22 |
53,520 |
125,520 |
|
|
Hahn Eunjung Inc. |
12/30/22 |
40,000 |
|
|
12/08/22 |
80,000 |
||
|
11/25/22 |
63,600 |
183,600 |
|
|
Park So-yeon Company |
11/17/22 |
138,840 |
|
|
10/09/22 |
132,000 |
||
|
08/20/22 |
74,400 |
345,240 |
|
|
Jeon Boram Corporation |
12/10/22 |
250,000 |
250,000 |
|
Qri Incorporated |
09/12/22 |
104,400 |
104,400 |
|
Total |
1,219,760 |
The accounts receivables balances were confirmed with the customers. You noted the following exceptions:
|
Customers |
Balance per reply |
Remarks |
|
Park Ji-yeon Inc. |
197,000 |
The invoice dated 10/29/22 was erroneously priced at P84 per unit. The agreed price per the customer’s approved purchase order was at P70. |
|
Hyomin Company |
83,520 |
Invoice dated 12/30/22 was for a sale made on the same date. A significant clause in the sale agreement with Hyomin Company is to install the merchandise sold which the company yet to accomplish as of December 31. |
|
Hahn Eunjung Inc. |
143,600 |
The difference was due to the invoice dated 12/30/22. Goods have not been received by Hahn Eunjung yet as of December 31, 2022. Term of sale is FOB shipping point. |
|
Park So-yeon Company |
326,400 |
Credit memo for customer return for damanged goods worth P18,840 related to the invoice dated 11/17/22 was recorded in January of the following year. |
|
Jeon Boram Corporation |
200,000 |
Invoice dated 12/10/22 was the sales price of 2,500 units of merchandise delivered to Jeon Boram on the same date on consignment basis. As of December 31, per Jeon Boram’s reply, 500 units still remained on hand. The consignment agreement provides Jeon Boram a commission of 20% based on sales. |
|
Qri Incorporated |
No Reply |
Qri is under liquidation and the amount receivable from the company is deemed definitely uncollectible. |
- The balance of allowance for doubtful accounts at the beginning of the year was at P52,500. During the year, the company wrote-off P44,200 receivables and recorded P24,800 from the previously written-off accounts. The company policy with regard uncollectible accounts are summarized below:
|
Age |
% of collectability |
|
0 – 30 days |
99% |
|
31 – 60 days |
98% |
|
61 – 90 days |
95% |
|
91 -120 days |
90% |
|
Over 120 days |
50% |
Questions: Based on above and result of your audit, answer the following:
What is the correct balance of the accounts receivable from Jeon Boram?
What is the correct balance of the accounts receivable gross of any allowances as of December 31?
What is the correct allowance for
What is the correct bad debt expense?
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