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Based on the above and the result of you 1. Collections from customers in 2018 2. Gross sales, accrual basis in 2018 3. Payments for merchandise purchases in 2018 in 2018

Based on the above and the result of you 1. Collections from customers in 2018 2. Gross sales, accrual basis in 2018 3. Payments for merchandise purchases in 2018 in 2018

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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CHAPTER 11: ERROR CORRECTION; CASH/ACCRUAL AND SINGLE ENTRY Your audit of Edu Company revealed that your client kept very limited records. Purchases of merchandise were paid for by check, but most other items were out of cash receipts. The company's collections were deposited weekly. No record was kept of cash in the bank, nor was these copies were given to the customers when paying their accounts. a record kept of sales. Accounts receivable were recorded only by keeping copy of tickets, and Audit notes: a. The company started its operations on January 2, 2018 and issue common stock, 216,000 shares with 100 par, for the following considerations: c. d. CHAPTER 11-PROBLEM 11: Cash Building, useful life of 15 years Land b. An analysis of the bank statements showed total deposits, including original cash investment, of P12,600,000. The balance in the bank statement on December 31, P1,800,000 16,200,000 5,400,000 2018, was P900,000. but there were checks amounting to P180,000 dated in December but not paid by the bank until January 2019. Cash on hand on December 31, 2018 was P450,000 including customers' deposit of P135,000. During the year, Edu borrowed P1,800,000 from the bank and repaid P450,000 and P90,000 interest. P30,000 in accrued interest is unpaid by the end of the year. Disbursements paid in cash during the year were as follows: Utilities, P360,000; Salaries, P360,000; Supplies, P720,000, and; Dividends, P540,000. Year-end balances of related accounts are: Utilities payable, P40,000; Salaries payable, P25,000; Unused supplies, P150,000; Dividends payable, P60,000. e. An inventory of merchandise taken on December 31, 2018 showed P2,718,000 of merchandise. f. Tickets for accounts receivable totaled P3,240,000 but P180,000 of that amount may prove uncollectible. 9. Unpaid supplier invoices for merchandise amounted to P1,260,000. h. Equipment with a cash price of P1,440,000 was purchased in early January on one-year installment basis. During the year, checks for the down payment and all maturing installments totaled P1,602,000. The equipment has a useful life of 5 years. 2. Gross sales, accrual basis in 2018 3. Payments for merchandise purchases in 2018 Based on the above and the result of your audit, determine the following: 1. Collections from customers in 2018 4. Gross purchases, accrual basis in 2018 5. Cost of goods sold in 2018 6. Net income for the year ended December 31, 2018 AUDITING PRACTICE (2022 Ed.)/CTEspenilla 379
Transcribed Image Text:CHAPTER 11: ERROR CORRECTION; CASH/ACCRUAL AND SINGLE ENTRY Your audit of Edu Company revealed that your client kept very limited records. Purchases of merchandise were paid for by check, but most other items were out of cash receipts. The company's collections were deposited weekly. No record was kept of cash in the bank, nor was these copies were given to the customers when paying their accounts. a record kept of sales. Accounts receivable were recorded only by keeping copy of tickets, and Audit notes: a. The company started its operations on January 2, 2018 and issue common stock, 216,000 shares with 100 par, for the following considerations: c. d. CHAPTER 11-PROBLEM 11: Cash Building, useful life of 15 years Land b. An analysis of the bank statements showed total deposits, including original cash investment, of P12,600,000. The balance in the bank statement on December 31, P1,800,000 16,200,000 5,400,000 2018, was P900,000. but there were checks amounting to P180,000 dated in December but not paid by the bank until January 2019. Cash on hand on December 31, 2018 was P450,000 including customers' deposit of P135,000. During the year, Edu borrowed P1,800,000 from the bank and repaid P450,000 and P90,000 interest. P30,000 in accrued interest is unpaid by the end of the year. Disbursements paid in cash during the year were as follows: Utilities, P360,000; Salaries, P360,000; Supplies, P720,000, and; Dividends, P540,000. Year-end balances of related accounts are: Utilities payable, P40,000; Salaries payable, P25,000; Unused supplies, P150,000; Dividends payable, P60,000. e. An inventory of merchandise taken on December 31, 2018 showed P2,718,000 of merchandise. f. Tickets for accounts receivable totaled P3,240,000 but P180,000 of that amount may prove uncollectible. 9. Unpaid supplier invoices for merchandise amounted to P1,260,000. h. Equipment with a cash price of P1,440,000 was purchased in early January on one-year installment basis. During the year, checks for the down payment and all maturing installments totaled P1,602,000. The equipment has a useful life of 5 years. 2. Gross sales, accrual basis in 2018 3. Payments for merchandise purchases in 2018 Based on the above and the result of your audit, determine the following: 1. Collections from customers in 2018 4. Gross purchases, accrual basis in 2018 5. Cost of goods sold in 2018 6. Net income for the year ended December 31, 2018 AUDITING PRACTICE (2022 Ed.)/CTEspenilla 379
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