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- PROBLEM NO. 3 In the audit of the books of Greenwich Company for the year 2020, the following items and information appeared in the Production Machines account of the auditee: Credit Date 2020 Jan. 01 Particulars Debit Balance-Machines 1, 2, 3, and 4 at P90,000 each P 360,000 Machine 5 Aug 31 198,000 Machine 1 Machine 6 P 3,000 Sept 30 Dec 01 Dec 01 31 96,000 432,000 Machines 7 and 8 at P216,000 each Machine 2 Balance 21,000 1,062,000 P1,086,000 P1.086,000 The Accumulated Depreciation account contained no entries for the year 2020. The balance on January 1, 2020 per your audit, was as follows: Machine 1 P 84,375 39,375 33,750 22,500 P 180,000 Machine 2 Machine 3 Machine 4 Total Based on your further inquiry and verification, you noted the following: 1. Machine 5 was purchased for cash; it replaced Machine 1, which was sold on this date for P3,000. 2. Machine 2 was destroyed by the thickness of engine oil used leading to explosion on December 1, 2020. Insurance of P21,000 was recovered.…You are assigned to audit Bonifacio Inc. for the year ending June 30, 2014. Prior to any adjustments you were able to extract the following balances from the client’s records:Accounts receivable, control account P221,250Allowance for doubtful accounts (7,500)Amortized cost P213,750Upon inspection of the records of Eisenhower Company in connection to its financial statement audit for the year ended December 31, 2022, the following errors were revealed: • A fire insurance premium of P 40,000 was paid and charged to insurance expense in 2021. This covers one year from April 1, 2021. • Inventory at December 31, 2020 was understated by P 80,000. • Inventory at December 31, 2021 was understated by P 120,000. • The year 2021 last quarter taxes amounting to P 60,000 were paid on January 19, 2022 and charged to expense account of 2022. • A cash advance of P 100,000 in payment of goods to be delivered in January 2022 was received on December 15, 2021 and credited to Sales. • The gross profit on sales is 40%. • The net income for the year ended December 31, 2021 before any adjustments is P 1,550.000. 1,200,000 1,440,000 1,550,000 1,600,000
- For the 2021 audit of the financial statements, you are tasked to audit EMPLEO Corporation's liabilities. 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 P0.50 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…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…Upon inspection of the records of Eisenhower Company in connection to its financial statement audit for the year ended December 31, 2022, the following errors were revealed: A fire insurance premium of P 40,000 was paid and charged to insurance expense in 2021. This covers one year from April 1, 2021. Inventory at December 31, 2020 was understated by P 80,000. Inventory at December 31, 2021 was understated by P 120,000. • The year 2021 last quarter taxes amounting to P 60,000 were paid on January 19, 2022 and charged to expense account of 2022. A cash advance of P 100,000 in payment of goods to be delivered in January 2022 was received on December 15, 2021 and credited to Sales. • The gross profit on sales is 40%. The net income for the year ended December 31, 2021 before any adjustments is P 1,550,000. O 1,550,000 O 1,200,000 O 1.440,000 O 1.600,000
- For the 2021 audit of the financial statements, you are tasked to audit EMPLEO Corporation’s liabilities. 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 P0.50 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…For the 2021 audit of the financial statements, you are tasked to audit EMPLEO Corporation’s liabilities. 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 P0.50 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…For the 2021 audit of the financial statements, you are tasked to audit EMPLEO Corporation’s liabilities. 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 P0.50 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…
- You are evaluating audit results for assets in the audit ofRoberts Manufacturing. You set the preliminary judgment about materiality at $50,000.The account balances, performance materiality, and estimated overstatements in theaccounts are shown next.Account Performance Estimate of TotalAccount Balance Materiality OverstatementsCash $ 50,000 $ 5,000 $ 1,000Accounts receivable 1,200,000 30,000 20,000Inventory 2,500,000 50,000 ?Other assets 250,000 15,000 12,000Total $4,000,000 $100,000 ? a. Assume you tested inventory amounts totaling $1,000,000 and found $10,000 inoverstatements. Ignoring sampling risk, what is your estimate of the total misstatement in inventory?b. Based on the audit of the assets accounts and ignoring other accounts, are the overallfinancial statements acceptable? Explain.c. What do you believe the auditor should do in the circumstances?You are assigned to do the audit the work for Howard Ltd for the calendar year 2019, you found some issues that you believe represent possible adjustments to the company’s books. In addition, there are other issues that need to be addressed. The matters include: Several credit memos that were processed and recorded after year-end relate to sales and account receivables for 2019. These total $42 000. Electricity and other utilities’ invoices received after the cut-off date $30,000 Inventory cut-off tests indicate that $35 000 of inventory received on 30 December 2019 was recorded as purchases and accounts payable in 2020. These items were included in the inventory count at year-end and were therefore included in ending inventory. On 15 December 2019, Howard Ltd declared a bonus issue of 2 000 shares with a par value of $100 000 of its ordinary shares, payable 25 January 2020 to the ordinary shareholders on record as in 30 December 2019. Howard Ltd has not established a reserve for…You are engaged in the audit of Kaya Co., a new client, on December 31,2018. You review the following accounts in the general ledger: Accounts Receivable Beg.Bal., P200,000 Sales 4,000,000 Total P4,200,000 Loan Receivable Loan granted to a customer, 1/1/2018 P3,600,000 P4,000,000 400,000 Total P4,000,000 P4,000,000 Unearned Interest Income orig. Fees Direct P11,520 Balance 288,480 Total P300,000 in 1/1/2018 P2,596,000 1,484,000 120,000 Accounts receivable Retained earnings b. Sales discount 2018 Loan receivable b. Loan receivable paid end uncollectible P4,200,000 Unearned interest income a. P2,720,000 b. P2,750,000 P300,000 Additional information: A. The beginning balance of the accounts receivable on January 1,2018 was net of the allowance for doubtful accounts in 2017 amounting to P20,000. One of the credits in the accounts receivable was made as a result of cash collections. When receivables were collected, the bookkeeper credited accounts receivable for the cash collected.…