So, owner of a trading company engaged your services as auditor. There is a discrepancy between the company’s income and the sales volume. The owner suspects that the staff is committing theft. You are to determine whether or not this is true. Your investigation revealed the following:The physical taken on December 31, 2018 under your observation showed that cost was P26,500. The inventory on January 1, 2018 showed cost of P39,000.The accounts receivable as of January 1, 2018 were P13,500. During 2018, accounts receivable written off amounted to P1,000. Accounts receivable as of December 31, 2018 were P37,500.Outstanding purchase invoices amounted to P30,000 at the end of 2018. At the beginning of 2018, they were P37,500.Receipts from customers during 2018 amounted to P300,000.Disbursement to merchandise creditors amounted to P200,000.The average gross profit rate was 40% of net sales. Required:Total SalesTotal PurchasesInventory Shortage

Calculation of Total Sales(Amount in P) Closing Accounts receivables 37500 Add) Write off 1000…

Answered: So, owner of a trading company engaged…

Auditing: A Risk Based-Approach (MindTap Course List)

11th Edition

ISBN:9781337619455

Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Publisher:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Chapter1: Quality Auditing: Why It Matters

Section: Chapter Questions

Problem 38RQSC: As the auditor for XYZ Company, you discover that a material sale ($500,000 sale; cost of goods of...

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So, owner of a trading company engaged your services as auditor. There is a discrepancy between the company’s income and the sales volume. The owner suspects that the staff is committing theft. You are to determine whether or not this is true. Your investigation revealed the following:
The physical taken on December 31, 2018 under your observation showed that cost was P26,500. The inventory on January 1, 2018 showed cost of P39,000.
The accounts receivable as of January 1, 2018 were P13,500. During 2018, accounts receivable written off amounted to P1,000. Accounts receivable as of December 31, 2018 were P37,500.
Outstanding purchase invoices amounted to P30,000 at the end of 2018. At the beginning of 2018, they were P37,500.
Receipts from customers during 2018 amounted to P300,000.
Disbursement to merchandise creditors amounted to P200,000.
The average gross profit rate was 40% of net sales.

Required:

Total Sales
Total Purchases
Inventory Shortage

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