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Purchases for the year ended December 31, 2020 should amount to: * A. 4,500,000 B. 4,527,000 C. 4,631,000 D. 5,727,00

Purchases for the year ended December 31, 2020 should amount to: * A. 4,500,000 B. 4,527,000 C. 4,631,000 D. 5,727,00

FINANCIAL ACCOUNTING
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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. Purchases for the year ended December 31, 2020 should amount to: *
A. 4,500,000
B. 4,527,000
C. 4,631,000
D. 5,727,000

The following unadjusted balances of selected accounts as of December 31, 2020 are as follows: Accounts Receivable, P600,000; Inventory, P804,000; and Accounts Payable, P600,000. You observed the physical inventory of goods in the warehouse on December 31 and were satisfied that it was properly taken. When performing sales and purchases cut-off tests, you found that on December 31, the last Receiving Report which had been used was No. 1063 and that no shipments had been made on any Sales Invoices whose number is larger than No. 968. You also obtained the following additional information: a. Included in the warehouse physical inventory at December 31 were goods which had been purchased and received on Receiving Report No. 1060 but for which the invoice was not received until the following year. Cost was P27,000. b. On the evening of December 31, there were two trucks in the company siding: - Truck No. XXX 888 was unloaded on January 2, 2021 and received on Receiving a Report No. 1063. The freight was paid by the vendor. - Truck No. MGM 357 was loaded and sealed on December 31 but left the company premises on January 2. This order was sold for P150,000 per sales Invoice No. 968. c. Temporarily stranded at December 31 at the railroad siding were two delivery trucks entoute to Course Hero Corporation. Course Hero received the goods, which were sold on Sales Invoice No. 966 terms FOB Destination, the next day. d. Enroute to the client on December 31 was a truckload of goods, which was received on Receiving Report No. 1064. The goods were shipped FOB Destination, and freight of P2,000 was paid by the client. However, the freight was deducted from the purchase price of P800,000.
Transcribed Image Text:The following unadjusted balances of selected accounts as of December 31, 2020 are as follows: Accounts Receivable, P600,000; Inventory, P804,000; and Accounts Payable, P600,000. You observed the physical inventory of goods in the warehouse on December 31 and were satisfied that it was properly taken. When performing sales and purchases cut-off tests, you found that on December 31, the last Receiving Report which had been used was No. 1063 and that no shipments had been made on any Sales Invoices whose number is larger than No. 968. You also obtained the following additional information: a. Included in the warehouse physical inventory at December 31 were goods which had been purchased and received on Receiving Report No. 1060 but for which the invoice was not received until the following year. Cost was P27,000. b. On the evening of December 31, there were two trucks in the company siding: - Truck No. XXX 888 was unloaded on January 2, 2021 and received on Receiving a Report No. 1063. The freight was paid by the vendor. - Truck No. MGM 357 was loaded and sealed on December 31 but left the company premises on January 2. This order was sold for P150,000 per sales Invoice No. 968. c. Temporarily stranded at December 31 at the railroad siding were two delivery trucks entoute to Course Hero Corporation. Course Hero received the goods, which were sold on Sales Invoice No. 966 terms FOB Destination, the next day. d. Enroute to the client on December 31 was a truckload of goods, which was received on Receiving Report No. 1064. The goods were shipped FOB Destination, and freight of P2,000 was paid by the client. However, the freight was deducted from the purchase price of P800,000.
You were engaged by Bartleby Graduate Corporation for the audit of the company's financial statements for the year ended December 31, 2020. The company is engaged in the wholesale business and makes all sales at 25% over cost. The following were gathered from the client's accounting records (RR - Receiving Report; SI - Sales Invoice): Sales Reference Amount P 7,950,000 Date Balance forwarded 12/27 12/28 SI No. 965 SI No. 966 SI No. 967 SI No. 969 60,000 225,000 12/28 12/31 15,000 69,000 12/31 12/31 12/31 SI No. 970 SI No. 971 Closing Entry 102,000 24,000 (8,445,000) Purchases Date Reference Amount P 4,304,000 Balance forwarded 12/28 12/30 RR #1059 36,000 RR #1061 105,000 12/31 12/31 RR #1062 63,000 RR #1063 96,000 12/31 Closing entry (4,604,000)
Transcribed Image Text:You were engaged by Bartleby Graduate Corporation for the audit of the company's financial statements for the year ended December 31, 2020. The company is engaged in the wholesale business and makes all sales at 25% over cost. The following were gathered from the client's accounting records (RR - Receiving Report; SI - Sales Invoice): Sales Reference Amount P 7,950,000 Date Balance forwarded 12/27 12/28 SI No. 965 SI No. 966 SI No. 967 SI No. 969 60,000 225,000 12/28 12/31 15,000 69,000 12/31 12/31 12/31 SI No. 970 SI No. 971 Closing Entry 102,000 24,000 (8,445,000) Purchases Date Reference Amount P 4,304,000 Balance forwarded 12/28 12/30 RR #1059 36,000 RR #1061 105,000 12/31 12/31 RR #1062 63,000 RR #1063 96,000 12/31 Closing entry (4,604,000)
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