EBK AUDITING & ASSURANCE SERVICES: A SY
11th Edition
ISBN: 9781260687668
Author: Jr
Publisher: MCGRAW-HILL LEARNING SOLN.(CC)
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Chapter 10, Problem 10.30P
To determine
Introduction:
Cost of goods sold: It the value of the goods which is sold during the year. It the basic cost of the goods without the profit element. It is calculated by adding opening stock and purchases during the year and subtracting the result by closing stock.
Goods on consignment: This means the goods that are sent to another party to sell on behalf of the owner and unsold goods are returned in the end.
To ensure the proper cut off of the sales and inventory and prepare the adjusting
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You were engaged in the audit of Pelton Company as of December 31, 2021. The company is on a physical inventory basis.
The physical inventory was actually taken on December 28, 2021. You have observed the taking of the physical inventory.
As taken, the physical inventory only included only merchandise received through December 28, 2021.
The following list of invoices is for purchases of merchandise and are entered in the purchase journal during the last few
days of 2021 and the first few days of year 2022:
DECEMBER 2021
Receiving Report No.
24201
Freight terms
Destination
Date of shipment
December 23, 2021
December 24, 2021
December 24, 2021
December 24, 2021
December 26, 2021
December 26, 2021
December 26, 2021
January 3, 2022
Date of goods receipt
December 26, 2021
December 30, 2021
December 31, 2021
December 29, 2021
January 3, 2022
December 31, 2021
January 4, 2022
January 4, 2022
Amount
P35,000
16,000
13,200
28,000
26,100
19,200
14,300
15,920
Shipping point
Shipping point…
On April 1, 2020, you were hired by Binus Inc., a closely held company, as a staff member of its newly created internal auditing department. While reviewing the company’s records for 2018 and 2019, you discover that no adjustments have yet been made for the items listed below:
Merchandise inventory costing $24,000 was in the warehouse at December 31, 2018, but was incorrectly omitted from the physical count at that date. The company uses the periodic inventory method.
Explain the problems for each items and prepare journal entries showing the adjustments that are required!
Having been engaged as external auditor of Duhat Company on February 28, 2019, you were unable to observe the taking of inventory on December 31, 2019, which was reported to amount to P360,000. The following data, however, were gathered by you:
Inventory, December 31, 2018 - P320.00
Purchases during 2019 - P1,410,000
Cash sales during 2019 - P350.00
Shipment received on December 26, 2019, included physical inventory but, not recordeds as purchases - P10,000
Deposits made with suppliers, entered as purchases, goods were not received in 2019 - P20,000
Collections on accounts receivable, 2019 - P1,800,000
Accounts Receivable, January 1, 2019 - P250,000
Accounts Receivable, December 31, 2019 - P300,000
Gross Profit percentage on sales - 40%
Determine how much is the estimated inventory shortage at December 31, 2019.
Chapter 10 Solutions
EBK AUDITING & ASSURANCE SERVICES: A SY
Ch. 10 - Prob. 10.1RQCh. 10 - Prob. 10.2RQCh. 10 - Prob. 10.3RQCh. 10 - Prob. 10.4RQCh. 10 - Prob. 10.5RQCh. 10 - Prob. 10.6RQCh. 10 - Prob. 10.7RQCh. 10 - Prob. 10.8RQCh. 10 - Prob. 10.9RQCh. 10 - Prob. 10.10RQ
Ch. 10 - Prob. 10.11RQCh. 10 - Prob. 10.12MCQCh. 10 - Prob. 10.13MCQCh. 10 - Prob. 10.14MCQCh. 10 - Prob. 10.15MCQCh. 10 - Prob. 10.16MCQCh. 10 - Prob. 10.17MCQCh. 10 - Prob. 10.18MCQCh. 10 - Prob. 10.19MCQCh. 10 - Prob. 10.20MCQCh. 10 - Prob. 10.21MCQCh. 10 - Prob. 10.22MCQCh. 10 - Prob. 10.23MCQCh. 10 - Prob. 10.24PCh. 10 - Prob. 10.25PCh. 10 - Prob. 10.26PCh. 10 - Prob. 10.27PCh. 10 - Prob. 10.28PCh. 10 - Prob. 10.29PCh. 10 - Prob. 10.30P
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