Chapter 3: Audit of receivablesChapter 3: Audit of receivables60 days old and below61 to 90 daysOver 90 daysAdvances to officersP750,000510,000280,000 P1,540,000We have not yet sold Merchandise billed for P125,000the goods. We will remit were consigned to Mark onthe proceeds as soon October 10, 2021. The goods costas the goods are sold.Mark150,000(90,000)P1,600,000P62,000.Accounts with credit balancesAccounts receivable per SLWe do not owe youP60,000. We already The sale of merchandise onReymond paid our accounts as November 26, 2021 was paid byby Reymond on January 4, 2022.The credit balance in customers account represents collection fromacustomer whose account has been written off as uncollectible in prior vesAccounts receivable for more than a year totaling P75,000 should bewritten off. A total of P45,000 was provided as bad debts during the periodbased on the company's policy of providing bad debts.evidencedOR#5678.This amount represents freightpaidmymerchandisebyforshipped20, 2021,customertheKindlybalance by P10,000.reducedA confirmation letters were sent to various customers, the result ofconfirmation were as follows:PierceonFOBDecemberdestination.Customer Customer's commentsRemarkson The client failed to record creditmemo No. 155 for P60,000. TheThe goods soldDecemberreturned on December merchandise was included in the20, 2021.Based on your inquiry with the credit and collections manager ofMalapascua, you noted that the company's policy in estimating bad debts(which is based on your judgment as an auditor is fair) uses the following4wereAlgerending inventory at cost.Investigation revealed that goodssold for P80,000 were shipped toAeson on December 30., 2021;FOB shipping point. The goodsrates:60 days old and below61 to 90 daysOver 90 days6%12%24%We do not owe thisamount. We do notreceivemerchandise fromcompany.Aesonanywere lost in transit and theshippingacknowledged its responsibility forthe loss of merchandise.AlloyDetermine the following as a result of your audit:1. What are your proposed adjusting journal entries in relation to youraudit of the accounts receivable balance?2. How much is the adjusted gross balance of accounts receivable as ofDecember 31, 2021?3. How much is the adjusted balance of allowance for bad debts as ofDecember 31, 2021?4. How much is the correct bad debts expense to be reported in its 2021statement of comprehensive income?yourcompanyhasisanemployeeI am entitled to a 10% Malapascua who started workingemployeeYour bill should be employees are entitled for specereduced.Alloydiscount.November of 2021, all company3. How much is the amount of accounts receivable reported in itsDecember 31, 2021 statement of financial position?of10% discount. Sales invoiceAlloy amounting to P30,000 wasdated December 15, 2021.Page (165 Case 3In connection with the audit of the financial statements of MalapascuaCompany, the audit manager provided you the instructions to examine thedetails of the company's accounts receivable. You have extracted thefollowing balances from the trial balance prepared by your client as ofDecember 31, 2021:Accounts receivableAllowance for bad debts - beginningusP1,600,00043,500Your audit client provided you the schedule of the accounts receivablesubsidiary ledger based on ageing policy:Accounts with debit balancesPage |163

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Case 3 In connection with the audit of the financial statements of Malapascua Company, the audit manager provided you the instructions to examine the details of the company's accounts receivable. You have extracted the following balances from the trial balance prepared by your client as of December 31, 2021: Accounts receivable Allowance for bad debts-beginning P1,600,000 43,500 Your audit client provided you the schedule of the accounts receivable subsidiary ledger based on ageing policy: Accounts with debit balances

Case 3 In connection with the audit of the financial statements of Malapascua Company, the audit manager provided you the instructions to examine the details of the company's accounts receivable. You have extracted the following balances from the trial balance prepared by your client as of December 31, 2021: Accounts receivable Allowance for bad debts-beginning P1,600,000 43,500 Your audit client provided you the schedule of the accounts receivable subsidiary ledger based on ageing policy: Accounts with debit balances

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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