FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Question
. Purchases for the year ended December 31, 2020 should amount to: *
A. 4,500,000
B. 4,527,000
C. 4,631,000
D. 5,727,000
Transcribed Image Text:The following unadjusted balances of selected accounts as of December 31, 2020 are as follows:
Accounts Receivable, P600,000; Inventory, P804,000; and Accounts Payable, P600,000. You observed
the physical inventory of goods in the warehouse on December 31 and were satisfied that it was
properly taken.
When performing sales and purchases cut-off tests, you found that on December 31, the last Receiving
Report which had been used was No. 1063 and that no shipments had been made on any Sales Invoices
whose number is larger than No. 968. You also obtained the following additional information:
a. Included in the warehouse physical inventory at December 31 were goods which had been purchased
and received on Receiving Report No. 1060 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, 2021 and received on Receiving a Report No. 1063. The
freight was paid by the vendor.
- Truck No. MGM 357 was loaded and sealed on December 31 but left the company premises on
January 2. This order was sold for P150,000 per sales Invoice No. 968.
c. Temporarily stranded at December 31 at the railroad siding were two delivery trucks entoute to
Course Hero Corporation. Course Hero received the goods, which were sold on Sales Invoice No. 966
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. 1064. 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.
Transcribed Image Text:You were engaged by Bartleby Graduate Corporation for the audit of the company's financial
statements for the year ended December 31, 2020. The company is engaged in the wholesale business
and makes all sales at 25% over cost. The following were gathered from the client's accounting records
(RR - Receiving Report; SI - Sales Invoice):
Sales
Reference
Amount
P 7,950,000
Date
Balance forwarded
12/27
12/28
SI No. 965
SI No. 966
SI No. 967
SI No. 969
60,000
225,000
12/28
12/31
15,000
69,000
12/31
12/31
12/31
SI No. 970
SI No. 971
Closing Entry
102,000
24,000
(8,445,000)
Purchases
Date
Reference
Amount
P 4,304,000
Balance forwarded
12/28
12/30
RR #1059
36,000
RR #1061
105,000
12/31
12/31
RR #1062
63,000
RR #1063
96,000
12/31
Closing entry
(4,604,000)
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