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    MASTERY CLASS IN AUDITING PROBLEMS Part 1 Prob 1 9

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    Mark Gelo Winchester
    The inventory impairment loss for July is P45,900. No. 2 August 1 no. of inventory units 45,000 Add: August unit purchases 80,000 No. of units available for sale 125,000 Less: No. of units sold (90,000) Cost, 8/31 337,500.00 No. of units in EI 35,000 NRV, 8/31 280,000.00 Cost of EI 337,500.00 35T units x P8.00 = 280,000

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    MASTERY CLASS IN AUDITING PROBLEMS Part 1 Prob 1 9

    Uploaded by

    Mark Gelo Winchester
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    The inventory impairment loss for July is P45,900. No. 2 August 1 no. of inventory units 45,000 Add: August unit purchases 80,000 No. of units available for sale 125,000 Less: No. of units sold (90,000) Cost, 8/31 337,500.00 No. of units in EI 35,000 NRV, 8/31 280,000.00 Cost of EI 337,500.00 35T units x P8.00 = 280,000

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    MASTERY-CLASS-IN-AUDITING-PROBLEMS-Part-1-Prob-1-9

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    The inventory impairment loss for July is P45,900. No. 2 August 1 no. of inventory units 45,000 Add: August unit purchases 80,000 No. of units available for sale 125,000 Less: No. of units sold (90,000) Cost, 8/31 337,500.00 No. of units in EI 35,000 NRV, 8/31 280,000.00 Cost of EI 337,500.00 35T units x P8.00 = 280,000

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    © All Rights Reserved
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    Download as pdf or txt
    237 views35 pages

    MASTERY CLASS IN AUDITING PROBLEMS Part 1 Prob 1 9

    Uploaded by

    Mark Gelo Winchester
    The inventory impairment loss for July is P45,900. No. 2 August 1 no. of inventory units 45,000 Add: August unit purchases 80,000 No. of units available for sale 125,000 Less: No. of units sold (90,000) Cost, 8/31 337,500.00 No. of units in EI 35,000 NRV, 8/31 280,000.00 Cost of EI 337,500.00 35T units x P8.00 = 280,000

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    of 35

    MASTERY CLASS IN

    Auditing Problems
    Mr. Brian Christian S. Villaluz, CPA
    Problem 1
    Correct amount 37,600
    Amount cleared 28,600

    No. 1 Understatement in cash 9,000

    Per client Per bank statement


    Unadjusted Balances 3,741,600.00 3,191,700.00
    a. Returned Check (112,500.00)
    b. Bank posting error 9,000.00
    c. Unrecorded check 17,500.00
    d. Deposits in transit 681,250.00
    Outstanding checks (1,381,900.00)
    e. Postdated checks (336,500.00) (336,500.00)
    f. Unrecorded debit memos (1,150,000.00)
    g. Unrecorded interest income 9,750.00
    h. Bank service charges (6,300.00)
    Adjusted Balance 2,163,550.00 2,163,550.00

    Answer: B
    No. 2

    PCF imprest balance 150,000.00


    EVs – 2020 (81,250.00)
    EVs – 2021 -
    Cash advance to employee – 2020 (17,500.00)
    PCF, 12/31/2020 51,250.00

    Answer: B
    No. 3

    Cash in Bank - Landbank 2,163,550.00


    Cash in Bank – BDO (Restricted) -
    Petty Cash Fund 51,250.00
    90-day Time Deposit 25,000,000.00
    Cash and Cash Equivalents, 12/31/2020 27,214,800.00

    Answer: A
    Problem 2
    Bank December
    11/30/2020 Receipts Disbursements 12/31/2020 Book December
    Unadj. Bal. 685,180.00 308,120.00 356,080.00 637,220.00 11/30/2020 Receipts Disbursements 12/31/2020
    OC, 11/30 (64,140.00) (64,140.00) Unadj. Bal. 637,860.00 306,220.00 367,660.00 576,420.00
    OC, 12/31 74,080.00 (74,080.00) Bank CM, 12/31 2,060.00 2,060.00
    DIT, 11/30 15,260.00 (15,260.00) Err. Disb., 12/31 (3,000.00) 3,000.00
    DIT, 12/31 16,140.00 16,140.00 2,020.00 (2,020.00)
    Err. Charge 1,500.00 (1,500.00) Stop payment order (780.00) (780.00)
    Err. Disb. (2,420.00) 2,420.00 BSC, 11/30 (60.00) (60.00)
    2,240.00 (2,240.00) 637,800.00 307,500.00 365,840.00 579,460.00
    637,800.00 307,500.00 365,840.00 579,460.00
    Problem 3
    No. 1
    Sales Return (30,000.00) Sales Return (30,000.00)
    Less: Related CGS (30T x 80%) 24,000.00 X: Gross profit rate 20%
    Effect on net income (6,000.00) Effect on net income (6,000.00)

    Answer: C
    No. 2
    Answer: A
    No. 3
    Bal. per books 48,000.00
    Divided by: Price charged 150.00
    # of units sold 320

    Answer: B
    No. 4
    Bal. per books 48,000.00
    Correct bal. (320u x P100) 32,000.00
    Overstatement of AR 16,000.00

    Answer: D
    No. 5
    Answer: A
    No. 6
    Answer: D
    Problem 4
    Solution
    Classification by month of sale
    TOTAL Prior to 1/1/20 Jan. - June Jul. - Oct. Nov. - Dec. 2020
    Balances per aging 4,540,000.00 260,000.00 800,000.00 1,200,000.00 2,280,000.00
    320,000.00 320,000.00
    (120,000.00) (120,000.00)
    Adjusted balances 4,740,000.00 140,000.00 800,000.00 1,200,000.00 2,600,000.00
    X: Uncollectibility % 70% 35% 8% 1.50%
    Adjusted ADA 513,000.00 98,000.00 280,000.00 96,000.00 39,000.00
    CV of A/R 4,227,000.00

    Allowance for doubtful accounts

    Accounts written off 180,000.00 260,000.00 1/1/2020 Doubtf. accts. expense - 2020,
    Provisions for doubtful accounts per client 360,000.00
    360,000.00 (18M x 2%) Additional doubtful accounts – 2020 163,000.00
    30,000.00 Recoveries of accounts written off Corr. Doubtf. Accts. expense – 2020 523,000.00
    Add’l accts. to be Allow. for doubtful accounts, 12/31/2020
    written off 120,000.00 470,000.00 - per client
    163,000.00 Adjustment - Add'l doubtful accounts
    Allow. for doubtful accounts, 12/31/2020
    513,000.00 - per audit
    Problem 5
    No. 1 Outstanding principal amount of the loan, 12/31/2019 11,000,000.00
    Add: Accrued interest, 12/31/2019 (Recorded) -
    Carrying value of the loan, 12/31/2019 11,000,000.00
    Carrying value of the loan, 12/31/2019 11,000,000.00
    PV of future cash inflows, 12/31/2019 9,117,000.00
    Loan impairment loss - 2019 1,883,000.00

    Future cash inflows x PV factor = PV of future cash inflows


    12/31/2020 3,500,000.00 x 0.9091= 3,181,850.00
    12/31/2021 4,000,000.00 x 0.8264= 3,305,600.00
    12/31/2022 3,500,000.00 x 0.7513= 2,629,550.00
    PV of future cash inflows, 12/31/2019 9,117,000.00
    Nos. 2-4
    Carrying value of
    Date Collection Interest income Collection applied to principal loan receivable
    12/31/2019 9,117,000.00
    12/31/2020 3,500,000.00 911,700.00 2,588,300.00 6,528,700.00
    12/31/2021 4,000,000.00 652,870.00 3,347,130.00 3,181,570.00
    Problem 6
    Nos. 1-3
    A/R Sales Inventory
    Balances per client 225,000.00 2,543,000.00 127,500.00
    1) (2,000.00)
    2)
    3) (2,000.00) (2,000.00)
    4) (6,900.00) (6,900.00)
    5) (600.00)
    6)
    7) (4,000.00) (4,000.00)
    8) (10,000.00) (10,000.00) 5,600.00
    9) 6,000.00 6,000.00 (4,000.00)
    10)
    11)
    12) 8,000.00 8,000.00 (5,500.00)
    Adjusted balances 216,100.00 2,534,100.00 121,000.00
    No. 4
    Beg. Invty. -
    Add: Purchases 1,125,600.00
    TGAS 1,125,600.00
    Less: End Invty. (121,000.00)
    Cost of goods sold 1,004,600.00
    Problem 7
    Analysis
    Cash A/R Invty. A/P
    Per client 963,200.00 2,254,000.00 6,050,000.00 4,201,000.00
    A (654,600.00) 310,000.00
    B 360,000.00 372,400.00
    C 1 275,000.00
    2 217,500.00 217,500.00
    3 (637,500.00)
    4 130,000.00
    5 (175,000.00)
    6
    Adjusted 668,600.00 2,564,000.00 6,035,000.00 4,615,900.00
    Problem 8
    No. 1 July 1 no. of inventory units
    Add: July unit purchases
    50,000
    100,000
    No. of units available for sale 150,000
    Less: No. of units sold (105,000)
    Cost, 7/31 337,500.00 No. of units in EI 45,000
    NRV, 7/31 291,600.00 Cost of EI 337,500.00 30T units x P8.00 = 240,000.00
    LCNRV, 7/31 291,600.00 15T units x P6.50 = 97,500.00
    337,500.00

    Selling price 7.20


    Less: selling cost (0.72)
    NRV per unit 6.48
    X: No. of units in ending inventory 45,000
    NRV 291,600.00
    No. 2
    Cost, 7/31 337,500.00
    LCNRV, 7/31 291,600.00
    Allowance for inventory writedown, 7/31 45,900.00
    Less: Allowance for inventory writedown, 7/1 3,000.00
    Loss on inventory writedown - July 42,900.00
    No. 3
    50T units x P6.00 = 300,000.00
    CGS before loss on inventory writedown 657,500.00 55T units x P6.50 = 357,500.00
    Add: Loss on inventory writedown 42,900.00 657,500.00
    Adjusted CGS - July 700,400.00
    Problem 9
    No. 1

    ABC shares -
    DEF shares (40T sh. X P6.00/sh.) 240,000.00
    GHI shares (4M x 25%) 1,000,000.00
    1,240,000.00
    No. 2
    Int. Inc-2019 (4,000,000 x 10% x 6/12) = 200,000.00
    Acquisition cost (50T sh. X P96/sh.) 4,800,000

    Add: Share in profit – 2019 1,000,000

    No. 3 Less: Cash dividends from associate – 2019 (50T sh. X P10/sh.) (500,000)

    Inv. In GHI shares, 12/31/2019 5,300,000

    ABC shares (20T sh. X P70/sh.) 1,400,000.00


    DEF shares (40T sh x P50/sh.) 2,000,000.00
    GHI shares 5,300,000.00
    JKL Bonds (4M x 0.97) 3,880,000.00
    12,580,000.00
    No. 4
    ABC DEF GHI JKL
    Fair value 1,400,000.00 2,000,000.00 3,880,000.00
    Balance per books 1,120,000.00 2,160,000.00 3,946,000.00
    Unrealized gain (loss) 280,000.00 (160,000.00) (66,000.00) 54,000.00
    No. 5
    Date Interest Interest Discount Carrying value
    Collected Income Amortization
    (Outst. Face x SIR) (CV x EIR)
    7/1/2019 3,946,000
    12/31/2019 200,000 236,760 36,760 3,982,760
    To be continued…

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