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In conducting your audit of Blue Lagoon Corporation, a company engaged in import and wholesale business, for the fiscal year ended June 30, 2021, you determined that its internal control system was good. Accordingly, you observed the physical inventory at an interim date, May 30, 2021 instead of at June 30, 2021. You obtained the following information from the company's general ledger. Sales for eleven months ended May 31, 20121 (before audit adjustments) Sales for the fiscal year ended June 30, 2021 (before audit adjustments) Purchases for eleven months ended May 31, 2021 (before audit adjustments) Purchases for the fiscal year ended June 30, 2021 (before audit adjustments) Inventory, July 1, 2020 Physical inventory, May 30, 2021 P1,615,000 1,843,000 1,296,000 1,536,000 170,200 264,000 Your audit disclosed the following additional information. a. Shipments costing P12,000 were received in May and included in the physical inventory but recorded as June purchases. b. Deposit of P4,000 made with vendor and charged to purchases in April 2021. Product was shipped in July 2021. c. A shipment in June was damaged through the carelessness of the receiving department. This shipment was later sold in June at its cost of P56,000. d. Sale of goods for P75,000 was recorded in the company's books on June 1, 2021. Your further inquiry reveals that the goods were shipped to buyer on May 31, term FOB shipping point. The goods cost P26,000. e. Shipment of goods on May 29, 2021 terms FOB destination with cost of P30,000 was recorded as sales for P60,000 in May. The goods were received by the buyer on June 3, 2021.

In conducting your audit of Blue Lagoon Corporation, a company engaged in import and wholesale business, for the fiscal year ended June 30, 2021, you determined that its internal control system was good. Accordingly, you observed the physical inventory at an interim date, May 30, 2021 instead of at June 30, 2021. You obtained the following information from the company's general ledger. Sales for eleven months ended May 31, 20121 (before audit adjustments) Sales for the fiscal year ended June 30, 2021 (before audit adjustments) Purchases for eleven months ended May 31, 2021 (before audit adjustments) Purchases for the fiscal year ended June 30, 2021 (before audit adjustments) Inventory, July 1, 2020 Physical inventory, May 30, 2021 P1,615,000 1,843,000 1,296,000 1,536,000 170,200 264,000 Your audit disclosed the following additional information. a. Shipments costing P12,000 were received in May and included in the physical inventory but recorded as June purchases. b. Deposit of P4,000 made with vendor and charged to purchases in April 2021. Product was shipped in July 2021. c. A shipment in June was damaged through the carelessness of the receiving department. This shipment was later sold in June at its cost of P56,000. d. Sale of goods for P75,000 was recorded in the company's books on June 1, 2021. Your further inquiry reveals that the goods were shipped to buyer on May 31, term FOB shipping point. The goods cost P26,000. e. Shipment of goods on May 29, 2021 terms FOB destination with cost of P30,000 was recorded as sales for P60,000 in May. The goods were received by the buyer on June 3, 2021.

Intermediate Accounting: Reporting And Analysis
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter8: Inventories: Special Valuation Issues
Section: Chapter Questions
Problem 5C: Gross Profit Shelly Corporation is an importer and wholesaler. Its merchandise is purchased from...
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Chapter 4: Audit of Inventories 2. How much is the net purchases for the year ended June 30? a. P1,536,000 b. P1,540,000 3. How much is the cost of sales for the month of June? a. P164,280 b. P172,180 c. P1,5008,000 d. P1,532,000 c. P178,380 d. P180,180 4. How much is the adjusted inventory as of May 31? a. P264,000 b. P268,000 c. P238,000 d. P208,000 5. How much is the estimated ending inventory as of June 30? a. P323,820 b. Р320,380 с. Р341,820 d. P327,380
Transcribed Image Text:Chapter 4: Audit of Inventories 2. How much is the net purchases for the year ended June 30? a. P1,536,000 b. P1,540,000 3. How much is the cost of sales for the month of June? a. P164,280 b. P172,180 c. P1,5008,000 d. P1,532,000 c. P178,380 d. P180,180 4. How much is the adjusted inventory as of May 31? a. P264,000 b. P268,000 c. P238,000 d. P208,000 5. How much is the estimated ending inventory as of June 30? a. P323,820 b. Р320,380 с. Р341,820 d. P327,380
In conducting your audit of Blue Lagoon Corporation, a company engaged in import and wholesale business, for the fiscal year ended June 30, 2021, you determined that its internal control system was good. Accordingly, you observed the physical inventory at an interim date, May 30, 2021 instead of at June 30, 2021. You obtained the following information from the company's general ledger. Sales for eleven months ended May 31, 20121 (before audit adjustments) Sales for the fiscal year ended June 30, 2021 (before audit adjustments) Purchases for eleven months ended May 31, 2021 (before audit adjustments) Purchases for the fiscal year ended June 30, 2021 (before audit adjustments) Inventory, July 1, 2020 Physical inventory, May 30, 2021 P1,615,000 1,843,000 1,296,000 1,536,000 170,200 264,000 Your audit disclosed the following additional information. a. Shipments costing P12,000 were received in May and included in the physical inventory but recorded as June purchases. b. Deposit of P4,000 made with vendor and charged to purchases in April 2021. Product was shipped in July 2021. c. A shipment in June was damaged through the carelessness of the receiving department. This shipment was later sold in June at its cost of P56,000. d. Sale of goods for P75,000 was recorded in the company's books on June 1, 2021. Your further inquiry reveals that the goods were shipped to buyer on May 31, term FOB shipping point. The goods cost P26,000. e. Shipment of goods on May 29, 2021 terms FOB destination with cost of P30,000 was recorded as sales for P60,000 in May. The goods were received by the buyer on June 3, 2021.
Transcribed Image Text:In conducting your audit of Blue Lagoon Corporation, a company engaged in import and wholesale business, for the fiscal year ended June 30, 2021, you determined that its internal control system was good. Accordingly, you observed the physical inventory at an interim date, May 30, 2021 instead of at June 30, 2021. You obtained the following information from the company's general ledger. Sales for eleven months ended May 31, 20121 (before audit adjustments) Sales for the fiscal year ended June 30, 2021 (before audit adjustments) Purchases for eleven months ended May 31, 2021 (before audit adjustments) Purchases for the fiscal year ended June 30, 2021 (before audit adjustments) Inventory, July 1, 2020 Physical inventory, May 30, 2021 P1,615,000 1,843,000 1,296,000 1,536,000 170,200 264,000 Your audit disclosed the following additional information. a. Shipments costing P12,000 were received in May and included in the physical inventory but recorded as June purchases. b. Deposit of P4,000 made with vendor and charged to purchases in April 2021. Product was shipped in July 2021. c. A shipment in June was damaged through the carelessness of the receiving department. This shipment was later sold in June at its cost of P56,000. d. Sale of goods for P75,000 was recorded in the company's books on June 1, 2021. Your further inquiry reveals that the goods were shipped to buyer on May 31, term FOB shipping point. The goods cost P26,000. e. Shipment of goods on May 29, 2021 terms FOB destination with cost of P30,000 was recorded as sales for P60,000 in May. The goods were received by the buyer on June 3, 2021.
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