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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You are in the course of auditing a trading company for the year ended 31 March 2020. You are that the client appears to have accounts receivable collection problem. It is the client's policy to allow a 30-day credit to each of its customers and to provide a general provision for bad debt as 1 per cent of the year-end accounts receivable balance. However, you observe that most of the client's customers have been outstanding for more than 60 days at the year ended 31 March 2020. According to past experience with the client, you noted that the client had written off of bad debt amounted to $378,000 and 423,500 for the year ended 31 March 2019 and 31 March 2018, respectively. In those years, accounts receivable balances as at 31 March 2019 was $3,450,000 and as at 31 March 2018 was $5,650,000. It is industrial practice to provide 1 per cent of the year-end accounts receivable balance as provision for bad debts. a) Perform (i) an industry analysis and (ii) a trend analysis based on the…
Question Annahelm Corp. received the July Bank Statement from Elstow Bank, which showed an opening balance of $123,456.70 and a service charge of $20. The accountant of the corporation noticed that there are three deposits in transit resulting a total of $6,780.90, and two outstanding cheques resulting a total of $8,698.10. Complete the reconciliation process and determine the final balance if Annahelm Corp. has $121,539.50 on the book. Not yet a Marked c P Flag qu O a. $123,436.70 O b. $121,519.50 O c. $119,602.30 O d. $119,622.30 P Type here to search
Assume you are a new hire in the accounting department of an organization. One of your responsibilities is the reconciliation of the operating account. After the end of the month you are given a copy of the bank statement and the cancelled checks, and are instructed to perform your reconciliation. You notice that there are some faint markings on a portion of the bank statement that could be alterations. What steps would you take in performing the reconciliation?
The following items were included in Wong Company's January Year 1 bank reconciliation. Required: Determine whether each item will require adjustments to the book balance of Wong's cash account and indicate the amount of any necessary adjustment. Note: Amounts to be deducted should be indicated with a minus sign. a. Service charges of $14 for the month of January were listed on the bank statement. b. The bank charged a $164 check drawn on Wing Restaurant to Wong's account. The check was included in Wong's bank statement. c. A check of $29 was returned to the bank because of insufficient funds and was noted on the bank statement. Wong received the check from a customer and thought that it was good when it was deposited into the account. d. A $908 deposit was recorded by the bank as $980. e. Four checks totaling $328 written during the month of January were not included with the January bank statement. f. A $84 check written to OfficeMax for office supplies was recorded as $48. g. The…
The accountant for Beaume Corp. was preparing a bank reconciliation as of April 30. The following items were identified: Beaume's book balance $43,145 Outstanding cheques 900 Interest earned on chequing account 63 Customer's NSF cheque returned by the bank 375 In addition, Beaume made an error in recording a customer's cheque; the amount was recorded in cash receipts as $370; the bank recorded the amount correctly as $730. Required: What amount will Beaume report as its adjusted cash balance at April 30?
Accounting Q/ Prepare a Bank Reconciliation Statement for XYZ company that has: Bank statement of SR9,000. Cash account of SR7,500. Additional information for the reconciliation: Deposit in transit. NSF Check. Outstanding check. Collections made by the bank. Required: provide an amount of each information to bring the adjusted balances to be equal.
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The Treasury Accounts-MDS, Regular account of Agency ABC as of December 31, 2020, had the following transactions: Outstanding Check P25,850, Bank Charges P4,750, Overstatement of MDS Account due to erroneous recording of NCA (with ARO) received P150,000, Overstatement of MDS Account due to erroneous recording of the amount of check issues issued P20,000, Understatement of NCA for regular recorded by bank P800,000, Lapsed NCA for regular account with ARO P420,000, Understatement of MDS Account due to erroneous recording of the amount of checks issued P8,000, NCA received by bank but not recognized by the Agency P543,210. Agency Book Balance P11,043,540, Balance per Bank P10,225,850.How much is the Adjusted balance per book and bank? *
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