In conducting your audit of Blue Lagoon Corporation, a company engaged in import and wholesale business, for the fiscal year ended June 30, 2021, you determined that its internal control system was good. Accordingly, you observed the physical inventory at an interim date, May 30, 2021 instead of at June 30, 2021. You obtained the following information from the company's general ledger. Sales for eleven months ended May 31, 20121 (before audit adjustments) Sales for the fiscal year ended June 30, 2021 (before audit adjustments) Purchases for eleven months ended May 31, 2021 (before audit adjustments) Purchases for the fiscal year ended June 30, 2021 (before audit adjustments) Inventory, July 1, 2020 Physical inventory, May 30, 2021 P1,615,000 1,843,000 1,296,000 1,536,000 170,200 264,000 Your audit disclosed the following additional information. a. Shipments costing P12,000 were received in May and included in the physical inventory but recorded as June purchases. b. Deposit of P4,000 made with vendor and charged to purchases in April 2021. Product was shipped in July 2021. c. A shipment in June was damaged through the carelessness of the receiving department. This shipment was later sold in June at its cost of P56,000. d. Sale of goods for P75,000 was recorded in the company's books on June 1, 2021. Your further inquiry reveals that the goods were shipped to buyer on May 31, term FOB shipping point. The goods cost P26,000. e. Shipment of goods on May 29, 2021 terms FOB destination with cost of P30,000 was recorded as sales for P60,000 in May. The goods were received by the buyer on June 3, 2021.
In conducting your audit of Blue Lagoon Corporation, a company engaged in import and wholesale business, for the fiscal year ended June 30, 2021, you determined that its internal control system was good. Accordingly, you observed the physical inventory at an interim date, May 30, 2021 instead of at June 30, 2021. You obtained the following information from the company's general ledger. Sales for eleven months ended May 31, 20121 (before audit adjustments) Sales for the fiscal year ended June 30, 2021 (before audit adjustments) Purchases for eleven months ended May 31, 2021 (before audit adjustments) Purchases for the fiscal year ended June 30, 2021 (before audit adjustments) Inventory, July 1, 2020 Physical inventory, May 30, 2021 P1,615,000 1,843,000 1,296,000 1,536,000 170,200 264,000 Your audit disclosed the following additional information. a. Shipments costing P12,000 were received in May and included in the physical inventory but recorded as June purchases. b. Deposit of P4,000 made with vendor and charged to purchases in April 2021. Product was shipped in July 2021. c. A shipment in June was damaged through the carelessness of the receiving department. This shipment was later sold in June at its cost of P56,000. d. Sale of goods for P75,000 was recorded in the company's books on June 1, 2021. Your further inquiry reveals that the goods were shipped to buyer on May 31, term FOB shipping point. The goods cost P26,000. e. Shipment of goods on May 29, 2021 terms FOB destination with cost of P30,000 was recorded as sales for P60,000 in May. The goods were received by the buyer on June 3, 2021.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Transcribed Image Text:Chapter 4: Audit of Inventories
2. How much is the net purchases for the year ended June 30?
a. P1,536,000
b. P1,540,000
3. How much is the cost of sales for the month of June?
a. P164,280
b. P172,180
c. P1,5008,000
d. P1,532,000
c. P178,380
d. P180,180
4. How much is the adjusted inventory as of May 31?
a. P264,000
b. P268,000
c. P238,000
d. P208,000
5. How much is the estimated ending inventory as of June 30?
a. P323,820
b. Р320,380
с. Р341,820
d. P327,380
Transcribed Image Text:In conducting your audit of Blue Lagoon Corporation, a company engaged
in import and wholesale business, for the fiscal year ended June 30, 2021,
you determined that its internal control system was good. Accordingly, you
observed the physical inventory at an interim date, May 30, 2021 instead
of at June 30, 2021.
You obtained the following information from the company's general
ledger.
Sales for eleven months ended May 31, 20121 (before
audit adjustments)
Sales for the fiscal year ended June 30, 2021 (before
audit adjustments)
Purchases for eleven months ended May 31, 2021
(before audit adjustments)
Purchases for the fiscal year ended June 30, 2021
(before audit adjustments)
Inventory, July 1, 2020
Physical inventory, May 30, 2021
P1,615,000
1,843,000
1,296,000
1,536,000
170,200
264,000
Your audit disclosed the following additional information.
a. Shipments costing P12,000 were received in May and included in the
physical inventory but recorded as June purchases.
b. Deposit of P4,000 made with vendor and charged to purchases in April
2021. Product was shipped in July 2021.
c. A shipment in June was damaged through the carelessness of the
receiving department. This shipment was later sold in June at its cost
of P56,000.
d. Sale of goods for P75,000 was recorded in the company's books on
June 1, 2021. Your further inquiry reveals that the goods were shipped
to buyer on May 31, term FOB shipping point. The goods cost P26,000.
e. Shipment of goods on May 29, 2021 terms FOB destination with cost
of P30,000 was recorded as sales for P60,000 in May. The goods were
received by the buyer on June 3, 2021.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 5 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education