Chapter 3: Audit of receivablesChapter 3: Audit of receivables60 days old and below61 to 90 daysOver 90 daysAdvances to officersP750,000510,000280,000 P1,540,000We have not yet sold Merchandise billed for P125,000the goods. We will remit were consigned to Mark onthe proceeds as soon October 10, 2021. The goods costas the goods are sold.Mark150,000(90,000)P1,600,000P62,000.Accounts with credit balancesAccounts receivable per SLWe do not owe youP60,000. We already The sale of merchandise onReymond paid our accounts as November 26, 2021 was paid byby Reymond on January 4, 2022.The credit balance in customers account represents collection fromacustomer whose account has been written off as uncollectible in prior vesAccounts receivable for more than a year totaling P75,000 should bewritten off. A total of P45,000 was provided as bad debts during the periodbased on the company's policy of providing bad debts.evidencedOR#5678.This amount represents freightpaidmymerchandisebyforshipped20, 2021,customertheKindlybalance by P10,000.reducedA confirmation letters were sent to various customers, the result ofconfirmation were as follows:PierceonFOBDecemberdestination.Customer Customer's commentsRemarkson The client failed to record creditmemo No. 155 for P60,000. TheThe goods soldDecemberreturned on December merchandise was included in the20, 2021.Based on your inquiry with the credit and collections manager ofMalapascua, you noted that the company's policy in estimating bad debts(which is based on your judgment as an auditor is fair) uses the following4wereAlgerending inventory at cost.Investigation revealed that goodssold for P80,000 were shipped toAeson on December 30., 2021;FOB shipping point. The goodsrates:60 days old and below61 to 90 daysOver 90 days6%12%24%We do not owe thisamount. We do notreceivemerchandise fromcompany.Aesonanywere lost in transit and theshippingacknowledged its responsibility forthe loss of merchandise.AlloyDetermine the following as a result of your audit:1. What are your proposed adjusting journal entries in relation to youraudit of the accounts receivable balance?2. How much is the adjusted gross balance of accounts receivable as ofDecember 31, 2021?3. How much is the adjusted balance of allowance for bad debts as ofDecember 31, 2021?4. How much is the correct bad debts expense to be reported in its 2021statement of comprehensive income?yourcompanyhasisanemployeeI am entitled to a 10% Malapascua who started workingemployeeYour bill should be employees are entitled for specereduced.Alloydiscount.November of 2021, all company3. How much is the amount of accounts receivable reported in itsDecember 31, 2021 statement of financial position?of10% discount. Sales invoiceAlloy amounting to P30,000 wasdated December 15, 2021.Page (165 Case 3In connection with the audit of the financial statements of MalapascuaCompany, the audit manager provided you the instructions to examine thedetails of the company's accounts receivable. You have extracted thefollowing balances from the trial balance prepared by your client as ofDecember 31, 2021:Accounts receivableAllowance for bad debts - beginningusP1,600,00043,500Your audit client provided you the schedule of the accounts receivablesubsidiary ledger based on ageing policy:Accounts with debit balancesPage |163

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Case 3 In connection with the audit of the financial statements of Malapascua Company, the audit manager provided you the instructions to examine the details of the company's accounts receivable. You have extracted the following balances from the trial balance prepared by your client as of December 31, 2021: Accounts receivable Allowance for bad debts-beginning P1,600,000 43,500 Your audit client provided you the schedule of the accounts receivable subsidiary ledger based on ageing policy: Accounts with debit balances

Case 3 In connection with the audit of the financial statements of Malapascua Company, the audit manager provided you the instructions to examine the details of the company's accounts receivable. You have extracted the following balances from the trial balance prepared by your client as of December 31, 2021: Accounts receivable Allowance for bad debts-beginning P1,600,000 43,500 Your audit client provided you the schedule of the accounts receivable subsidiary ledger based on ageing policy: Accounts with debit balances

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Oscar Myer receives the March bank statement for Jam Enterprises on April 11, 2018. The March 31 bank statement shows an ending cash balance of $67,566. A comparison of the bank statement with the general ledger Cash account, No. 101, reveals the following. O. Myer notices that the bank erroneously cleared a $500 check against his account in March that he did not issue. The check documentation included with the bank statement shows that this check was actually issued by a company named Jam Systems. On March 25, the bank lists a $50 charge for the safety deposit box expense that Jam Enterprises agreed to rent from the bank beginning March 25. On March 26, the bank lists a $102 charge for printed checks that Jam Enterprises ordered from the bank. On March 31, the bank lists $33 interest earned on Jam Enterprises' checking account for the month of March. O. Myer notices that the check he issued for $128 on March 31, 2018, has not yet cleared the bank. O. Myer verifies that all deposits…
Items on company bank statement: 1. Bank correction of an error from posting another customers check(disbursement) to the company account 2. EFT deposit 3. Loan proceeds 4. NSF. Using the following format indicate whether each item would appear as a debit or credit memo on the bank statement and whether the item would increase or decrease the balance of the company account.
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For the 2021 audit of the financial statements, you are tasked to audit EMPLEO Corporation's abilities. The following information relates to the obligations of EMPLEO Corporation as of December 31, 2021: Accounts payable for goods and services purchased on open account amounted to P350,000 on December 31, 2021. This amount was gross of a supplier's debit balance of P30,000, On the other hand, the testing of the accounts receivable account revealed that a customer's credit balance of P50,000 was netted against the balance of the accounts receivable At December 31, 2021, EMPLEO declared a cash dividend at PO.50 per share on its P10 par value ordinary share capital, payable at January 12, 2022, to shareholders as of December 31, 2022. At December 31, 2021, EMPLEO had 1,000,0000 issued ordinary shares and 800,000 oustanding ordinary shares. The company financed its receivables, dated November 1, 2021, by discounting its 180-day P400,000 accounts receivable to a bank on a with…
A check drawn by a company in payment of a voucher for $965 was recorded in the journal as $695. This item would be included in the bank reconciliation as a(n) Oa. deduction from the balance per the bank statement Ob. addition to the balance per the company's records Oc. deduction from the balance per the company's records Od. addition to the balance per the bank statement 2:26 PM A 10/23/2020
AUDIT TASK Make sure that the cash balance per bank shown on the bank reconciliation is verified by the bank Analyze the gross profit percentage with respect to previous period(s) and industry data Verify that the client has deeds or other proof of ownership for land and other plant assets Compare checks written in the weeks following the end of the fiscal period to amounts in accounts payable at period-end Consider payroll cost and expenses (in total and as a percentage of sales) for this period compared to prior period(s) Test the sales journal to establish that sales transactions actually took place and are reported in the proper period Compare the number of days' sales in accounts receivable (average collection period) from this period to prior period(s) Obtain an aged schedule of accounts receivable from period-end and verify the aging of the balances RELEVANT ASSERTION(S) Existence / Occurrence Completeness Cutoff Valuation & Allocation Rights & Obligation AUDIT EVIDENCE Physical…
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