NAME : JULIE ANN G. PILI NOEL ANGELO RIVERA
In connection with your audit of the financial statements of MA-CPA KO PUHON CORPORATION for the year ended December 31, 2014, you conducted a surprise count of the company’s petty cash fund and other cash which might be on hand with the cashier, Ms. Julie Ann Pili, CPA, and your count disclosed the following:
Bills Coins
100.00 5 pieces 10.00 50 pieces
50.00 2 pieces 5.00 15 pieces
20.00 10 pieces 0.25 32 pieces
Checks
Date Payee Maker Amoun
t
Dec 30 Cash Custodian P 1,200
Dec 30 MA-CPA KO PUHON CORP.
Benjamin Laden Corp.
14,000 Dec 31 MA-CPA KO PUHON
CORP.
Benjamin Laden Corp.
1,680 Dec 31 MA-CPA KO PUHON
CORP.
Benjamin Laden Corp.
17,800 Dec 31 MA-CPA KO PUHON
CORP.
Ateneo, Inc. 8,300 Dec 31 Taiwan Corp. Benjamin Laden
Corp.
27,000
I.O.U’s
Date Maker Amount
Nov 1 Richard Yap, Clerk P 2,500 Nov. 2 Percival, messenger 1,500 Nov. 3 Leon Key, accountant 1000 Unreplenished Vouchers
Date Payee Description Amount
Dec 23 Mario Lansang, sales messenger
Advance for trip to Tagaytay City
P 20,000 Dec 28 Central Post Office Postage Stamps 1,620
Dec 29 Messengers Transportation 150
Dec 29 Byte Inc Computer Repair 800
You also found that the petty cash fund amounted to 50,000.
Further investigation also disclosed that the cash sales on January 2, 2015 amounted to P55,000 as shown by the sales records while Cash Receipt Book and Bank Deposit Slip showed that only 25,000 was deposited in the bank on January 4,
2015. You also found a pay envelope of Juan McDonut. The envelope was marked “Unclaimed” and opened with the amount 20,000.
You also gathered the following information in conducting an audit of the cash account of MA-CPA KO PUHON CORP. :
a. Balance per bank, December 1, 2014 P 145,000
b. Total bank receipts (credits) in December 346,000 c. Balance per bank, December 31, 2014
114,500
d. Outstanding checks, Nov. 30 2014
(including P12,000 paid by the in December) 67,000 e. Outstanding checks, December 31, 2014
(including checks issued in November) 94, 162 f. Deposit in transit, November 30, 2014 39, 458 g. A customer’s check received on December 4, 2014,
was returned by bank on December 7 marked
“NSF.” It was redeposited on December 8, 2014. The Only entry made was to take up the collection on
December 4, 2014. 11,143
You’re are also provided by the following information from its accounting records for the year ended December 31, 2014.
Inventory at December 31, 2014 (based on physical count) 2,880,000
Accounts Payable at December 31, 2014 1,650,000
Net sales 5,540,000
You obtained the additional information below:
a. Merchandise with a cost of P50,000 was included in the inventory count and the related purchase was not recorded. The goods have been shipped by the vendor F.O.B. Destination and only the invoice had been received during 2014.
b. Merchandise costing P100,500 was put on consignment to the CUTE KO Company and was excluded in the final inventory. No sale was recorded. c. Goods shipped to a customer F.O.B. Destination on December 26, 2014 were
in transit at December 31,2014 and had a cost of P70,000 and is excluded in the count of final inventory. Issued a sales invoice for P55,000 as inspected by the customer on January 2, 2015.
d. Received goods held on consignment from KAYA RA NI Company amounting to P100,000. These were included in the physical count of goods and in accounts payable at December 31, 2014.
e. Retailers have goods of P880,000 at cost (700,000 at retail) on consignment from MA-CPA KO PUHON Company, the consignor, at their stores on
December 31,2014.
f. Goods were in transit from a vendor. The goods were shipped F.O.B. Shipping point on December 30, 2014, and the invoice was P75,000.
Also, your audit of accounts receivable and other related accounts disclosed the following:
1. Accounts Receivable amounting to 500,000 as of December 31, 2014
2. An aging of the accounts receivable as of December 31, 2014 revealed the following:
Age Category
Net Debit Balance
Amount to which the allowance is to be adjusted
after adjustments and corrections have been made Under 2 mos. 171,000 3% 2 to 3 mos. 83,000 4% 3 to 4 mos. 25,000 5% Over 4 mos. 12,000 3,000 definitely uncollectible; remainder is estimated to be 70% collectible 3. Doubtful Account Expense have the following entries:
a. A credit for 1,296 on Novemebr 1, 2014, and a debit to allowance for Uncollectible Accounts because of bankruptcy. P 1,296 write-off of receivables relates to 3-4 months day age category
b. A debit on December 31 for the amount of the credit to Allowance for Doubtful Accounts
4. The Allowance for Bad Debts account is presented below: Balance Beginning Balance- Jan 1, 2014 7,800 Write Off-Sept 1, 2014 Debit 1,380 6,420 Provision (7% of 500,000) Credit 35,000 41,420 5. There is a credit balance in account receivable (2 to 3 mos.) of
Furthermore, the accompanying analyses of the Property, Plant and
Equipment and related accumulated depreciation accounts have been by prepared by the chief account of the client. The beginning balance is already provided based on you prior audit working paper.
The following are methods of depreciation used for each type of asset by MA-CPA KO PUHON CORP
Description Date of Purchase
Useful life Method
Land Jan 1, 2009 -
-Building March 31, 2011 6 years Straight Line Equipment-A July 1, 2010 8 years Straight Line
The following
are transactions during 2014:
1. Purchased land and building on November 1, 2014 amounting to
10,000,000 with a cost of 400,000 and 600,000 respectively. The building has estimated useful life of 10 years.
2. Equipment B with and invoice price of 315,000 with terms 5/10, n/30 was purchased on March 1, 2014. Installation and testing cost amounting to 4,000 and 6,000 respectively was incurred. Equipment have a useful of 5 years and will be depreciated using the straight line method without residual value.
3. On June 30, 2014, Equipment B was for 500,000 Requirement:
A. CASH
a. Prepare Cash Count Sheet and determine the cash shortage or overage b. Compute the following:
1. Total book receipts in December 2. Total bank disbursement in December 3. Total book disbursement in December B. INVENTORY
a. Compute the adjusted balance of the following: 1. Inventory
2. Accounts Payable 3. Net Income C. ACCOUNTS RECEIVABLE
A. Compute corrected balance of the following: 1. Accounts Receivable Description Beginning Balances COST ACCUMULATED DEP. Land 4,000,000 -Building 2,568,000 1, 177,000 Equipment-A 1,172,000 512,750
2. Allowance for Doubtful Accounts D. PPE
A. Prepare an audited Lapsing Schedule of the PPE
ANSWER KEY CASH
(A)
MA-CPA KO PUHON CORPORATION Cash Count
Bills 100.oo x 5 pieces = P 500
50.00 x 2 pieces = 100 20.00 x 10 pieces = 200 800 Coins 10.00 x 50 pieces = 500 5.00 x 15 pieces = 75 0.25 x 32 pieces = 8 583 1,383 Checks
Date Payee Maker Amount
Dec 30 Cash Custodian P 1,200
Dec 30 MA-CPA KO PUHON CORP.
Benjamin Laden Corp.
14,000 Dec 31 MA-CPA KO PUHON
CORP.
Benjamin Laden Corp.
1,680 Dec 31 MA-CPA KO PUHON
CORP.
Benjamin Laden Corp.
17,800 Dec 31 MA-CPA KO PUHON
CORP.
Ateneo, Inc. 8,300 Dec 31 Taiwan Corp. Benjamin Laden
Corp.
I.O.U’s
Unreplenished Vouchers
Date Payee Description Amount
Dec 23 Mario Lansang, sales messenger
Advance for trip to Tagaytay City
P 20,000 Dec 28 Central Post Office Postage Stamps 1,620 Dec 29 Messengers Transportation 150
Dec 29 Byte Inc Computer Repair 800 22, 570
TOTAL CASH COUNT 98,93
3 CASHIER’S ACCOUNTABILITY
Petty Cash Fund 50,000 Unclaimed Salary 20,000 Undeposited Sales 30,000 100,000 CASH SHORTAGE 1,067 (B) b1)
Bank receipts (credits) in December 346,000 Less: Deposit in transit, November 30 39,458
NSF check redeposited in December 11,143 50,601 Book receipts (debits) in December 295,399 b2)
Bank balance, December 1, 2014 145,000
Add: Bank receipts in December 346,000
Total 491,000
Less: Bank balance, December 31, 2014 114,500
Bank disbursement in December 376,500
b3)
Bank disbursements in December 376,500
Add: Book disbursement in December
but not in December bank disbursements: Check issued in December, outstanding at December 31:
Outstanding checks, Dec. 31 94,162
Date Maker Amount
Nov 1 Richard Yap, Clerk P 2,500
Nov. 2 Percival, messenger 1,500
Less: Checks issued in Nov.,
Still outstanding at Dec. 31 55,000 39,162
Total 415,662
Less: Bank disbursements in December but not in book disbursements in December
November outstanding checks
paid by bank in December 12,000
NSF Check 11,143 23, 143 Book disbursements (credits) in December 392,519 B.) INVENTORY Inventory Accounts Payable Net Sales Initial Amounts 2, 880,000 1,650,000 5,540,000 Adjustments : a. (50,000) b. 100,500 c. 70,000 d. (143,000) (143,000) e. 880,000 f. 9,000 9,000 Net Adjustments 866,500 (134,000) 0
Adjusted balance A1) 3,746,500 A2) 1,516,000 A3) 5,540,000 C.) ACCOUNTS RECEIVABLE
A2) Allowance for Doubtful Accounts: Unadjusted Balance 41,420 Uncollectible over
4 mos. (3,000)
ADA 12/31/14 38,420
Required AD 31,155.2
D.) PROPERTY, PLANT and EQUIPMENT
LAPSING SCHEDULE OF PPE
COST LAND BUILDING EQUIPMENT
Beginning 4,000,000 2,568,000 1,172,000 Unadjust ed Adjustment s Adjusted % Required Allowance Under 2 months 2 to 3 months 3 to 4 months Over 4 months 200,000 150,000 100,000 50,000 3,000 (1,296) (3,000) 200,000 153,000 98,704 47,000 3% 4% 5% 30% 6,000 6,120 4,935.2 14,100 P500,000 (4,080) A1) P450,920 P31,155.2
Bal.
Additions 4,000,000 (A) 6,000,000 (A) 310,000 (C)
Disposals - - (310,000) Ending Balance 8,000,000 8,568,000 1,172,000 ACC. DEP. Beginning Bal. - 1,177,000 512,750 Provisions - 528,000 (B) 167,167 (D) Disposals - - (20,667) (D) Ending Bal. - 1,705,000 659,250 BOOK VALUE 8,000,000 6,836,000 512,750 A. Land 400,000 4/10 4,000,000 Building 600,000 6/10 6,000,000 1,000,000 10,000,000 B. 2012
Depreciation Expense- Old bldg.
(2,568,000/6yrs) 428,000 Depreciation Expense-New bldg.
(6,000,000/10yrs)x2/12 100,000 528,000 C. Purchase Price (net of discount) 300,000
Installation and testing cost 10,000 310,000
D. 2012
Depreciation Ex.- Old Equipment
(1,172,000/8yrs) 146,500 Depreciation Ex-New Equipment
(310,000/5yrs)x4/12 20,667 167,167
