Ap 1

PROBLEM NO.
1
Cotabato Corporation’s current liabilities section of the Statement of Financial position as of December 31,
2010 appear as follows:
Current Liabilities:
Accounts Payable P1,830,000
Notes payable 2,010,000
Total Current Liabilities 3,840,000
The following errors in the corporation’s accounting have been discovered:
a. January 2011 cash disbursements entered as of December 2010 included payment of accounts payable in
the amount of P1,170,000, on which a cash discount of 2% was taken.
b. The inventory included P810,000 of merchandise that have been received at December 31 but for which
no purchase invoices have been received or entered. Of this amount P360,000 had been received on
consignment.
Compute the adjusted accounts payable balance as of December 31, 2010.
PROBLEM NO. 2
The following accounts were included in the adjusted trial balance of Jam Company as of December 31,
2010:
Cash P 481,600
Accounts receivable 1,127,000
Inventory 3,025,000
Accounts payable 2,100,500
Accrued expenses 215,500
During your audit you noted that Bani held its cash books open after year-ended. In addition, your audit
revealed the following:
1.Receipts for January 2011 of P327,300 were recorded in the December 2010 cash receipts book. The
receipts of P180,050 represents cash sales and P147,250 represents collections from customers, net of 5%
cash discounts.
2.Accounts payable of P186,200 was paid in January 2011. The payments on which discounts of P6,200
were taken, were included in the December 2010 check register.
3. Merchandise inventory is valued at P3,025,000 prior to any adjustments. The following information
had been found relating to certain inventory transactions.
a. Goods valued at P 137,500 are on consignment with a customer. These goods are not included in
the inventory figure.
b. Goods costing P108,750 were received from a vendor on January 4, 2011. The related invoice was
received and recorded on January 6, 2011. The goods were shipped on December 31, 2010, terms
FOB shipping point.
c. Goods costing P318,750 were shipped on December 31, 2010, and were delivered to the customer
on January 3, 2011. The terms of the invoice were FOB shipping point. The goods were included
in the 2010 ending inventory even though the sale was recorded in 2010.
d. A P 91,000 shipment of goods to a customer on December 30,terms FOB destination are not
included in the year-ended inventory. The goods cost P65,000 and were delivered to the customer
on January 3, 2011. The sale was recorded in 2011.
e. The invoice for goods costing P87,500 was received and recorded as a purchase on December 31,
2010. The related goods shipped FOB destination were received on January 4, 2011 and thus were
not included in the physical inventory.
f. Goods valued at P306,400 are on consignment from a vendor. These goods are not included in the
physical inventory.
QUESTIONS:
Based on the above and the results of your audit, determine the adjusted balances of the following
as December 31,2010.
1. Cash
2. Accounts receivable
3. Inventory
4. Accounts payable
PROBLEM NO.3 – Sales and purchase cuttoff
You were engaged by Asingan Corporation for the audit of the company financial statements for the year
ended December 31, 2010. The company is engaged in the wholesale business and makes all sales at 25%
over cost.
The following were gathered from the clients accounting records.
SALES PURCHASES
Date References Amount Date References Amount
Balance forwarded P7,800,000 Balanced forwarded P4,200,00
12/27 SI No. 865 60,000 12/28 RR #2059 36,000
12/28 SI No. 866 225,000 12/30 RR #2061 105,000
12/28 SI No. 867 15,000 12/31 RR #2062 63,000
12/31 SI No. 869 69,000 12/31 RR #2063 96,000
12/31 SI No. 870 102,000 12/31 CLOSING
ENTRY (4,500,000)
P________
12/31 SI No. 871 24,000
12/31 Closing
Entry (8,295,000)
P________
NOTE: SI= Sales invoice RR= Receiving Report
Accounts receivable P750,000

Inventory 900,000
Accounts Payable 600,000
You observed the physical inventory of goods in the warehouse on December 31, and were satisfied that it was
property taken.
When performing sales and purchase cut-off tests. You found that at December 31, the last Receiving Report
which had been used was No. 2063 and that no shipments had been made on any Sales Invoices whose number
is larger than No. 868. You also obtained the following additional information.
A) Included in the warehouse physical inventory at December 31, were goods which has been purchased
and received on Receiving Report no. 2060 but for which the invoice was not received until the
following year. Cost was P27,000
B) On the evening of December 31, there were two trucks in the company siding:
 Truck No. XXX 888 was unloaded on January 2 of the following year and received on Receiving
Report no. 2063. The freight was paid by the vendor.
 Truck No. MGM 357 was loaded and sealed on December 31 but leave the company premises on
January 2. This order was sold for P150,000 per sales invoice no. 868.
C) Temporarily stranded at December 31 at railroad siding were two delivery trucks enroute to ABC
Trading Corporation. ABC received the goods, which were sold on Sales Invoice No. 866 terms FOB
Destination, the next day.
D) Enroute to the client on December 31 was a truckload of goods, which was received on Receiving
Report No. 2064. The goods were shipped FOB Destination. And freight of P2,000 was paid by the
client. However, the freight was deducted from the purchase price of P800,000.
QUESTIONS:
Based on the above and the results of your audit, determine the following:
1. Sales for the year ended December 31, 2010

2. Purchases for the year ended December 31, 2010
3. Accounts receivable as of December 31,2010
4. Inventory as of December 31, 2010
5. Accounts payable as of December 31, 2010
PROBLEM NO.4
On May 1, 2016: Purchased 1,000 units of merchandise at P30 per unit.

On May 6, 2016: Sold 200 units of merchandise at P50 per unit on credit.
Journalize the following transactions and its pertinent journal entry at the end of the accounting period.
1. Under Perpetual Inventory System

2. Under Periodic Inventory System
PROBLEM NO.5
The following audited balances pertain to OWL COMPANY
Accounts payable:
January 1, 2010 P286,924
December 31, 2010 737,824
Inventory balance:
January 1, 2010 815,386
December 31, 2010 488,874
Cost of goods sold-2010 1,859,082
How much was paid by Owl Company to its suppliers in 2010?
PROBLEM NO.6 (MCQ- Select the BEST ANSWER)
Question: Purchase cutoff procedures should be designed to test whether all inventory.
A. Purchased and received before year end was paid for.

B. Ordered before year end was received
C. Purchased and received before year-end was recorded.
D. Owned by the company is in the possession of the company at year end.
Question: Purchase cutoff procedures test the cutoff and completeness assertions. A company should
include goods in its inventory if it.
A. Has sold the goods

B. Holds legal title to the goods
C. Has physical possession of the goods
D. Has paid for the goods.

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PROBLEM NO.

PROBLEM NO.3 – Sales and purchase cuttoff

The following were gathered from the clients accounting records.

NOTE: SI= Sales invoice RR= Receiving Report

Accounts receivable P750,000

1. Sales for the year ended December 31, 2010

On May 1, 2016: Purchased 1,000 units of merchandise at P30 per unit.

1. Under Perpetual Inventory System

The following audited balances pertain to OWL COMPANY

How much was paid by Owl Company to its suppliers in 2010?

PROBLEM NO.6 (MCQ- Select the BEST ANSWER)

A. Purchased and received before year end was paid for.

A. Has sold the goods

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