Problem 1. You were engaged for the first time to audit the FS of Bebeko Corporation for the periodended December 31, 2020. The company started its operation in 2018. In reviewing the books, theauditor discovered that certain adjustments had either been overlook or improperly recorded at theend of years to 2020. Omissions and other failures for each year are summarized below:December 312018201920201. Omissions of the following year-end accruals/deferrals:a. Accrued utilities expenseb. Accrued interest incomec. Prepaid rent expensed. Unearned royalty income|2. Delivery of merchandise at year-end to customers, recorded as salesupon collection the following year.3. Receipt of merchandise at year-end from suppliers, recorded aspurchases upon payment the following year.4. Cash received from customers at year-end, recorded as salesdeliveriesyet to be made the following year. In the year of collection,corresponding50007000600020004000300020001000800030005000100006000300030005000inventories at cost were included in the physical count.5. Payments to suppliers at year-end for goods to be received thefollowing20001000year, under FOB Destination, recorded as purchases upon payment.Inventories were included in physical count at the year when thesewere received.6. Overstatement in year-end inventories7. Understatement in year-end inventories8. Organization costs incurred in the start-up of the business at thebeginning of 2018 was capitalized by the company as an intangibleasset and has been amortized by 5 years.9. Major repairs on the company's equipment were recognized asoutright expenses. The company depreciates equipment at 20% perannum, but depreciation in the year of the expenditure is at 10%900070004000500003500040000The company's books also revealed the following information:This is your personal copy. Do not upload/share to any unauthorized sites/groups without yourteacher's permission. Thank you.201820192020Retained earnings325,000691,0001,001,000Profit345,000586,000460,000Dividends declared and distributed110,000130,000150,000Compute for the following:1. Adjusted profit for 20182. Adjusted profit for 20193. Adjusted profit for 20204. Retained earnings balance, 20185. Retained earnings balance, 20196. Retained earnings balance, 2020

Note:- Since you have posted a question with multiple sub-parts, we will solve the first three…

Problem 1. You were engaged for the first time to audit the FS of Bebeko Corporation for the period ended December 31, 2020. The company started its operation in 2018. In reviewing the books, the auditor discovered that certain adjustments had either been overlook or improperly recorded at the end of years to 2020. Omissions and other failures for each year are summarized below: December 31 2018 2019 2020 1. Omissions of the following year-end accruals/deferrals: a. Accrued utilities expense b. Accrued interest income C. Prepaid rent expense d. Unearned royalty income 2. Delivery of merchandise at year-end to customers, recorded as sales upon collection the following year. 3. Receipt of merchandise at year-end from suppliers, recorded as purchases upon payment the following year. 4. Cash received from customers at year-end, recorded as sales deliveries yet to be made the following year. In the year of collection, corresponding inventories at cost were included in the physical count. 5. Payments to suppliers at year-end for goods to be received the following 5000 7000 6000 2000 4000 2000 3000 1000 8000 3000 5000 10000 6000 3000 3000 5000 2000 1000 year, under FOB Destination, recorded as purchases upon payment. Inventories were included in physical count at the year when these were received. | 6. Overstatement in year-end inventories 7. Understatement in year-end inventories 8. Organization costs incurred in the start-up of the business at the beginning of 2018 was capitalized by the company as an intangible asset and has been amortized by 5 years. 9. Major repairs on the company's equipment were recognized as outright expenses. The company depreciates equipment at 20% per annum, but depreciation in the year of the expenditure is at 10% 9000 7000 4000 50000 35000 40000 The company's books also revealed the following information: This is your personal copy. Do not upload/share to any unauthorized sites/groups without your teacher's permission. Thank you.