You were engaged to audit the books of DEF Corporation who is in its first year and is using the cash basis of accounting. From the records of the company, you gathered the following cash receipts and disbursement records for 2018: Cash Receipts, P483,000; and Cash Disbursements, P247,500. The management requested you to compute its income under accrual basis. The following information are deemed relevant in your analysis: a. Depreciation of plant assets for 2018 computed by the straight-line method is P31,500. b. Prepaid insurance of P5,400, two-thirds of which relates to 2019, is included in the 2018 cash disbursements figure. This amount was recognized as insurance expense when it was paid. DEF Corporation received P36,000 in advance rent for space in its building. The entire amount is included in the cash receipts figure and was recognized as rent revenue when received. However, P20,000 of it was for space that will be provided in 2019. d. Employees are due P10,600 at the end of 2018. Interest amounting from an investment of 170,500 earnings interest at 10% has been accrued for 6 months at the end of 2018. C. е.
You were engaged to audit the books of DEF Corporation who is in its first year and is using the cash basis of accounting. From the records of the company, you gathered the following cash receipts and disbursement records for 2018: Cash Receipts, P483,000; and Cash Disbursements, P247,500. The management requested you to compute its income under accrual basis. The following information are deemed relevant in your analysis: a. Depreciation of plant assets for 2018 computed by the straight-line method is P31,500. b. Prepaid insurance of P5,400, two-thirds of which relates to 2019, is included in the 2018 cash disbursements figure. This amount was recognized as insurance expense when it was paid. DEF Corporation received P36,000 in advance rent for space in its building. The entire amount is included in the cash receipts figure and was recognized as rent revenue when received. However, P20,000 of it was for space that will be provided in 2019. d. Employees are due P10,600 at the end of 2018. Interest amounting from an investment of 170,500 earnings interest at 10% has been accrued for 6 months at the end of 2018. C. е.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Transcribed Image Text:You were engaged to audit the books of DEF Corporation who is in its first year and is using the cash basis
of accounting. From the records of the company, you gathered the following cash receipts and
disbursement records for 2018: Cash Receipts, P483,000; and Cash Disbursements, P247,500. The
management requested you to compute its income under accrual basis. The following information are
deemed relevant in your analysis:
a. Depreciation of plant assets for 2018 computed by the straight-line method is P31,500.
b. Prepaid insurance of P5,400, two-thirds of which relates to 2019, is included in the 2018 cash
disbursements figure. This amount was recognized as insurance expense when it was paid.
DEF Corporation received P36,000 in advance rent for space in its building. The entire amount is
included in the cash receipts figure and was recognized as rent revenue when received. However,
P20,000 of it was for space that will be provided in 2019.
d. Employees are due P10,600 at the end of 2018.
e. Interest amounting from an investment of 170,500 earnings interest at 10% has been accrued for
С.
6 months at the end of 2018.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 2 steps
Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education