The Accounts Receivable control accountbalance of BLOOMS COMPANY wasP264,000 as of December 31, 2018. The subsidiary ledger accounts of theCompany are summarized below. Credit terms are 60 days net.BALANCE8,0004,0009,0006,00014,00011,00014,000ACCOUNT NO. DATECREDITDEBIT8,0001.May 31July 174,0005,0003,000Sept. 1258,000Nov. 13,000Dec. 103,00012,000Aug. 8Oct. 412,00012,000Nov. 25 25,00025,0003. (Three-month,8% note)Jan. 1 100,000Mar 31-100,0002,000 cr.102,000(Two month,9% note)Dec. 1100,00098,0004.Feb. 3 20,00020,00044,000Aug. 324,0005.Feb. 10 30,00030,000Apr. 9May 4July 2Sept. 6Nov. 2530,00040,00040,00040,00060,0008,00060,00068,0002. ACCOUNT NO. DATEJuly 17Aug.16Sept.30(open)Oct. 15DEBIT5,0004,00015,000CREDITBALANCE5,0009.00024,0006.15,00021,00015,0009,00018Dec. 206,0006,000The allowance for uncollectible accounts, before audit, has a credit balance ofP8,000. The Allowance for Uncollectible Accounts is to be adjusted to balancedetermined as follows:Accounts not dueAccounts 1-60 days past dueAccounts 61-120 days past dueAccounts over 120 days past due1 percent2 percent5 percent50 percentThe allowance for uncollectible accounts is to be based only on the trade accounts.Except where payments are earmarked, the oldest items are paid first.REQUIRED:(b) Show the necessary audit adjustments as at December 31, 2018.

Accounts Receivable Accounts receivable is considered to be one of the main working capital…

The allowance for uncollectible accounts is to be based only on the trade accounts. Except where payments are earmarked, the oldest items are paid first. REQUIRED: (b) Show the necessary audit adjustments as at December 31, 2018.

The allowance for uncollectible accounts is to be based only on the trade accounts. Except where payments are earmarked, the oldest items are paid first. REQUIRED: (b) Show the necessary audit adjustments as at December 31, 2018.

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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Concept explainers

Audit Procedures

Audit Procedures are methods and techniques performed by the auditor to determine the quality of financial information of clients, thereby expressing an opinion on true & fair view of financial statements and entity position. They are identified and applied at the planning stage of audit after determining audit objectives, scope, approach, and risk assessment.

Question

100%

The Accounts Receivable control account
balance of BLOOMS COMPANY was
P264,000 as of December 31, 2018. The subsidiary ledger accounts of the
Company are summarized below. Credit terms are 60 days net.
BALANCE
8,000
4,000
9,000
6,000
14,000
11,000
14,000
ACCOUNT NO. DATE
CREDIT
DEBIT
8,000
1.
May 31
July 1
7
4,000
5,000
3,000
Sept. 1
25
8,000
Nov. 1
3,000
Dec. 10
3,000
12,000
Aug. 8
Oct. 4
12,000
12,000
Nov. 25 25,000
25,000
3. (Three-month,
8% note)
Jan. 1 100,000
Mar 31-
100,000
2,000 cr.
102,000
(Two month,
9% note)
Dec. 1
100,000
98,000
4.
Feb. 3 20,000
20,000
44,000
Aug. 3
24,000
5.
Feb. 10 30,000
30,000
Apr. 9
May 4
July 2
Sept. 6
Nov. 25
30,000
40,000
40,000
40,000
60,000
8,000
60,000
68,000
2.

ACCOUNT NO. DATE
July 17
Aug.16
Sept.30
(open)
Oct. 15
DEBIT
5,000
4,000
15,000
CREDIT
BALANCE
5,000
9.000
24,000
6.
15,000
21,000
15,000
9,000
18
Dec. 20
6,000
6,000
The allowance for uncollectible accounts, before audit, has a credit balance of
P8,000. The Allowance for Uncollectible Accounts is to be adjusted to balance
determined as follows:
Accounts not due
Accounts 1-60 days past due
Accounts 61-120 days past due
Accounts over 120 days past due
1 percent
2 percent
5 percent
50 percent
The allowance for uncollectible accounts is to be based only on the trade accounts.
Except where payments are earmarked, the oldest items are paid first.
REQUIRED:
(b) Show the necessary audit adjustments as at December 31, 2018.

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