Audit of Financial Statements
Audit of Financial Statements
Audit of Financial Statements
The entity used the percentage of completion method to account for long-term construction contracts for
financial statements and income tax purposes. All receivables on these contracts are considered to be collectible
within 12 months.
During 2015, estimated tax payments of P450,000 were charged to prepaid taxes. The entity has not recorded
income tax expense. There were no temporary or permanent differences. The tax rate is 30%.
On December 31, 2015, what amount should be reported as:
1. Total retained earnings 2. Total current assets
3. Total non-current liabilities 4. Total shareholder’s equity
PROBLEM 2. GFI Company provided the ff. information on December 31, 2016:
Current assets 6,200,000
Other assets 11,800,000
Total assets 18,000,000
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GENSANTOS FOUNDATION COLLEGE, INC.
Bulaong Extension, General Santos City 9500
BSA/BSAT/BSMA Department
AUDITING PROBLEMS E.J. SEBUA, CPA
Financial assets at amortized cost – held to maturity 1,200,000
Financial assets at fair value – through profit or losses 800,000
Trademark 600,000
Advances to officers – indefinite repayment 300,000
Patent 500,000
Land 800,000
Total P11,800,000
e. Capital includes:
Retained earnings P3,000,000
Share capital, P100 par 10,000,000
Retained earnings appropriated for plant expansion 1,000,000
Total P14,000,000
Requirements:
1. Total current assets 2. Total noncurrent assets
3. Total current liabilities 4. Total noncurrent liabilities
5. Total stockholder’s equity
PROBLEM 3. The adjusted account balances of UTV Corp. for the year ended December 31, 2015 are as follows:
Cash and cash equivalents P400,000
Bank Overdraft 100,000
Accounts receivable 900,000
Allowance for doubtful accounts 40,000
Raw materials 560,000
Goods in process 600,000
Finished goods 1,400,000
Financial assets at fair value through OCI 2,500,000
Land 1,000,000
Building 6,000,000
Accumulated depreciation – building 1,600,000
Plant and equipment 2,400,000
Accumulated depreciation – plant and equipment 400,000
Patent 800,000
Goodwill 1,400,000
Note payable, bank – due June 30, 2016 1,300,000
Note payable, bank – due June 30, 2017 2,100,000
Accounts payable 1,000,000
Employee benefit provisions 180,000
Warranty liabilities 80,000
Income tax payable 120,000
Deferred tax liability 280,000
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GENSANTOS FOUNDATION COLLEGE, INC.
Bulaong Extension, General Santos City 9500
BSA/BSAT/BSMA Department
AUDITING PROBLEMS E.J. SEBUA, CPA
Retained earnings, January 1, 2015 3,600,000
Revaluation surplus, January 1, 2015 360,000
Unrealized gain on financial assets, January 1, 2015 280,000
Share capital 6,000,000
Sales 10,000,000
Unrealized gain on financial assets during the year 100,000
Revaluation surplus on land during the year 140,000
Cost of sales 6,000,000
Selling expense 1,960,000
Administrative expenses 500,000
Finance cost 100,000
Income tax expense 160,000
The company declared and paid cash dividends totaling P1,000,000 during the year.
Requirements:
1) What is the total current assets to be reported in the 2015 statement of financial position?
2) What is the total non-current assets to be reported in the 2015 statement of financial position?
3) What is the total current liabilities to be reported in the 2015 statement of financial position?
4) What is the total noncurrent liabilities to be reported in the 2015 statement of financial position?
5) What is the total net income after tax to be reported in the 2015 statement of comprehensive income?
6) What is the total comprehensive income to be reported in the 2015 statement of comprehensive income?
7) What is the stockholder’s equity to be reported in the 2015 statement of comprehensive income?
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