AUDITING PROBLEMS PROBLEM 1: Abam Corporation is selling audio and video appliances. The company’s fiscal year ends on March 31. The following information relates the obligations of the company as of March 31, 2007. Notes payable Abam has signed several long- term notes with financial institutions. The maturities of these notes are given below. The total unpaid interest for all of these notes amount to P340,000 on March 31, 2007. Due date April 31, 2007 July 31, 2007 September 1, 2007 February 1, 2008 April 1, 2008- March 31, 2011
Amount P 600,000 900,000 450,000 450,000 2,700,000 P5,100,000
Estimated warranties: Abam has one year product warranty on some selected items. The estimated warranty liability on sales made during the 2005-2006 fiscal year and still outstanding as of March 31, 2006, amounted to P252,000. The warranty costs on sales made from April 1, 2006 to March 31, 2007 are estimated at P630,000. The actual warranty costs incurred during 2006- 2007 fiscal year as follows: Warranty claims honored on 2005- 2006 Warranty claims honored on 2006- 2007 sales Total
P252,000 285,000 P537,000
Trade payables Accounts payable for supplies, goods and services purchases on open account amount to P560,000 as of March 31, 2007. Dividends On march 10, 2007, Abam’s board of directors declared a cash dividend of P0.30 per common share and a 10% common stock dividend. Both dividends were to be distributed on Aptil 5, 2007 to common stockholders on record at the close of business on March 31, 2007. As of March 31, 2007, Abams has 5 million, P2 par value common stock shares issued and outstanding. Bonds payable Abams issued P5,000,000, 12% bonds, on October 1, 2001 at 96. The bonds will mature on October 1, 2011. Interest is paid semi- annually on October 1 and April 1. Abams uses straight line method to amortize bond discount. Based on the forgoing information, determine the adjusted balances of the following as of March 31, 2007: Questions 1. Estimated warranty payable a. P252,000 b. P345,000 2.
c. P630,000
d. P882,000
Unamortized bond discount a. P110,000 b. P200,000
c. P100,000
d. P90,000
Bond interest payable a. P0 b. P300,000
c. P150,000
d. P250,000
4.
Total current liabilities a. P6,445,000 b. P5,105,000
c. P5,445,000
d. P3,945,000
5.
Total noncurrent liabilities a. P7,700,000 b. P7,590,000
c. P7,500,000
d. P7,610,000
3.
PROBLEM 2: On January 1, 2007, Arcenith Corporation engaged an independent CPA to perform an audit for the year ended December 31, 2006. The company uses a periodic inventory system. The CPA did not observe the inventory count on December 31, 2006, as a result, a special examination was made of the inventory records. The financial statements prepared by the company (uncorrected) showed the following: ending inventory, P72,000; accounts receivable, P60,000; accounts payable, P30,000; sales, P400,000; net purchases, P160,000, and pretax income P51,000. The following data were found during the audit: 1. Merchandise received on January 2, 2007, costing P800 was recorded on December 31, 2006. An invoice on hand showed the shipment was made fob supplier’s warehouse on December 31, 2006. Because the merchandise was not on hand at December 31, 2006, it was not included in the inventory. 2. Merchandise that cost P18,000 was excluded from the inventory, and the related sale for P23,000 was recorded. The goods had been segregated in the warehouse for shipment; there was no contract for sale but a “tentative order by phone”. 3. Merchandise that cost P10,000 was out on consignment for Valentin Distributing Company and was excluded from the ending inventory. The merchandise was recorded as a sale P25,000 when shipped to Valentin on December 29, 2006. 4. A sealed packing case containing a product costing P900 was in Arcenith’s shipping room when the physical inventory was taken. It was included in the inventory because it was marked “Hold for customer’s shipping instructions.” Investigation revealed that the customer signed a purchase contract dated December 18, 2006, but that case was shipped and the customer billed on January 10, 2007. A sale for P1,500 was recorded on December 31, 2006. 5. A special item, fabricated to order for a customer, was finished and in the shipping room on December 31, 2006. The customer has inspected it and was satisfied. The customer was billed in full on that sale in the amount of P5,000. The item was included in inventory at cost, P1,000 because it was shipped on January 4, 2007. 6. Merchandise costing P15,600 was received on December 28, 2006. The goods were excluded from inventory, and a purchase was not recorded. The auditor located the related papers in the hands of the purchasing; they indicated, “On consignment from Roselyn Company”. 7. Merchandise costing P2,000 was received on January 8, 2007, and the related purchase invoice recorded January 9. The invoice showed the shipment was made on December 29, 2006, fob destination. The merchandise was excluded from the inventory. 8. Merchandise that cost P6,000 was excluded from the ending inventory and not recorded as a sale for P7,500 on December 31, 2006. The goods had been specifically segregated. According to the terms of the contract of sale, ownership will not pass until actual delivery. 9. Merchandise that cost P15,000 was included in the ending inventory. The related purchase has not been recorded. The goods had been shipped by the vendor fob destination, and the invoice was received on December 30, 2006. The goods was received on January 5, 2007. 10. Merchandise in transit that cost P7,000 was excluded from inventory because it was not on hand. The shipment from the vendor was fob shipping point. The purchase was recorded on December 29, 2006, when the invoice was received. 11. Merchandise in transit that cost P13,000 was excluded from inventory because it had not arrived. Although the invoice had arrived, the related purchase was not recorded by December 31, 2006. The merchandise shipped fob shipping point by the vendor.
12. Merchandise that cost P8,000 was included in the ending inventory because it was on hand. The merchandise had been rejected because of incorrect specifications and was being held for return to the vendor. The merchandise was recorded as a purchase on December 26, 2006. Question: Based on your analysis and the information above, answer the following: 6. The adjusted balance of inventory at year-end is: a. P 101,900 b. P 102,000 c. P 102,800
d. P 120,400
7. The adjusted balance of accounts receivable at year-end is: a. P 10,500 b. P 12,000 c. P 35,000
d. P 37,000
8. The adjusted balance of accounts payable at year-end is: a. P 43,000 b. P 35,000 c. P 30,000
d. P 22,000
9. The adjusted balance of Sales at year-end is: a. P 377,000 b. P 352,000 c. P 350,500
d. P 347,000
10. The adjusted balance of Net Purchases at year-end is: a. P 152,000 b. P 165,000 c. P 173,000
d. P 181,000
Problem 3: You are making an audit of the Darwin Corporation for the past calendar year. The balance of the Petty Cash account at December 31, 2006 was P1,300. Your count of the imprest cash count made at 8:30 am on January 3, 2007, in the presence of the petty cash custodian, revealed: Currency and coins
571.38
Checks: Date
Maker
Bank
12/28/06
Macky, vice-president
PNB
360.00
12/29/06
Andy, employee
DBP
60.00
12/31/06
Bobot, customer
RCBC
153.80
01/02/07
Neil, customer
PNB
121.36
01/10/07
Jeff, employee
PNB
60.00
(check received Dec. 29) (These checks were all considered good when deposited after dates shown on the checks. The first four checks were actually deposited Jan. 3; the last check was deposited Jan. 11; all five checks proved to be good.)
Vouchers: Dec. 11
#261 Richard, shipping clerk – temporary advance for the use of the receiving department. Your count of Mr. Richard’s fund revealed: currency – P28.80; merchandise freight bills, P31.20. P 60.00
Dec. 28
# 301 Postage
12.00
Dec. 29
# 302 Freight bill on merchandise purchases
47.30
Dec. 31
# 305 Freight bill on office supplies
88.93
Jan. 2
# 500 Freight bill on merchandise purchases
29.36
IOU
Dec. 21
Mabel, employee
36.00
Sales Invoices (for cash sales, collections handled by the petty cashier): Invoice # 315
Dec. 30
P 120.00
328
Dec. 31
153.80
334
Jan. 2
121.36
(As a general rule, the petty cashier endeavored to turn over the proceeds of cash sales to the general cashier on the 10th, 20th and last days of each month. Proceeds on these sales were recorded and deposited by the general cashier.)
Postage Stamps: Three one-peso stamps. The petty cashier handled postage stamps. These stamps represent the unused stamps purchased on Voucher # 301. Questions 11. The petty cash fund shortage at December 31, 2006 is: a. P 216.39 b. P 123.83 c. P 98.03
d. P 95.03
12. The adjusted petty cash fund balance of DARWIN CORPORATION at December 31, 2006 is: a. P 900.74 b. P 960.74 c. P 1,174.54 d. P 1,234.54 13. DARWIN CORPORATION’S operating expenses found in the petty cash fund at December 31, 2006 is: a. P 208.23 b. P 205.75 c. P 174.03 d. P 97.93 14. The Cash account (excluding PCF) of DARWIN CORPORATION is understated at December 31, 2006 by: a. P 395.16 b. P 273.80 c. P 153.80 d. P 120.00 15. An essential phase of the audit of the cash balance at the end of the year is the auditor's review of cutoff bank statement. This specific procedure is not useful in determining if a. Kiting has occurred. b. Lapping has occurred. c. The cash receipts journal was held open. d. Disbursements per the bank statement can be reconciled with total checks written. Problem 4: Information pertaining to Eddie Vic Corporation’s property, plant and equipment for 2005 is presented below: Account balances at January 1, 2005
Debit Land P 1,500,000 Building 12,000,000 Accum. depreciation-building Machinery and equipment 9,000,000 Accum. depreciation-Mach. and Eqpt
Credit P 2,631,000 2,500,000
Automotive Equipment 1,150,000 Accum. depreciation-Automotive Eqpt
846,000
Depreciation method and useful life Building – 150% declining balance; 25 years Machinery and equipment – Straight-line; 10 years Automotive equipment – Sum-of-the-years’-digits; 4 years The salvage value of the depreciable assets is immaterial Depreciation is computed to the nearest month. Transactions during 2005 and other information: On January 2, 2005, Eddie Vic purchased a new car for P350,000 cash and trade-in of a 2-year old car with a cost of P490,000 and a book value of P147,000. The new car has a cash price of P520,000; the market value of the trade-in is not known. On April 1, 2005, a machine purchased for P230,000 on April 1, 2000, was destroyed by fire. Eddie Vic recovered P155,000 from its insurance company. On July 1, 2005, machinery and equipment were purchased at a total invoice cost of P2,800,000; additional costs of P50,000 for freight and P250,000 for installation were incurred. Eddie Vic determined that the automotive equipment comprising the P1,150,000 balance at January 1, 2005, would have been depreciated at a total amount of P180,000 for the year ended December 31, 2005. Questions 16. Depreciation expense for building at December 31, 2005 is: a. P 749,520 b. P 720,000 c. P 682,150
d. P 562,140
17. Depreciation expense for machinery and equipment at December 31, 2005 is: a. P 1,049,250 b. P 1,037,750 c. P 1,032,000 d. P 877,000 18. Depreciation expense for Automobile equipment at December 31, 2005 is: a. P 388,000 b. P 312,000 c. P 290,000 d. P 180,000 19. Total depreciation expense for 2005 is: a. P 2,047,750 b. P 2,009,900
c. P 1,978,770
d. P 1,889,890
20. Total book value of property, plant, and equipment at December 31, 2005 is: a. P 19,141,110 b. P 19,021,100 c. P 18,983,250 d. P 18,953,730 Problem 5 You were engaged by Catacutan Company, a publicity held company whose shares are traded in the Philippines Share Exchange, to conduct an examination of its 2004 financial statements. You were told by the company’s controller that there were numerous equity transactions that took place in 2004. The shareholders’ equity accounts at December 31, 2003, had the following balances: Preference share, P100 par value, 6% cumulative; 15,000 shares authorized; 9,000 shares issued and outstanding Ordinary share, P1 par value, 900,000 shares authorized: 600,000 shares issued and outstanding Additional paid-in capital Retained earnings Total shareholders’ equity
P 900,000 600,000 1,200,000 3,198,000 P5,898,000
You summarized the following transactions during 2004 and other information relating to the shareholders’ equity in your working papers as follows:
January 6, 2004 – issued 22,500 shares of ordinary share to Difficult Company in exchange or land. On the date issued, the share had a market price of P16.50 per share. The land had a carrying value of P201,000, and an assessed value for property taxes of P135,000.
January 31, 2004 – Sold 1,350, P1,000, 12% bonds due January 31, 2006, at 98 with one detachable share warrant to each bond. Interest is payable annually on January 31. The fair value of the bonds without the share warrants is 95. The detachable warrant entitles the holder to purchase 10 shares of ordinary share at P10 per share.
February 22, 2004 – Purchased share for P24 per share.
February 28, 2004 – Subscriptions for 21,000 shares of ordinary share were received at P26 per share, payable 50% down and the balance by March 15.
March 15, 2004 – The balance due on 18,000 shares was received and those shares were issued. The subscriber who defaulted on the 3,000 remaining shares forfeited the down payment in accordance with the subscription agreement.
April 30, 2004 – Declared a dividend of inventory to ordinary shareholders. The inventory had a carrying value of P910,000:fair value on relevant dates were:
7,500 shares of its own ordinary share to be held as treasury
Date of declaration (April 30, 2004) Date of record (May 15, 2004) Date of distribution(May 31, 2004)
P950,000 900,000 920,000
August 30, 2004 – Reissued 3,000 shares of treasury share for P20 per share.
September 14, 2004 – There were 945 warrants detached from the bonds and exercised.
November 30, 2004 – Declared a cash dividend of P2 per share to all ordinary shareholders of record December 15, 2004. The dividend was paid on December 30, 2004.
December 15, 2004 – Declared the required annual cash dividends on preference share for 2004. the dividend was paid on January 15, 2004.
January 8, 2005 – Before closing the accounting records for 2004. Catacutan became aware that no amortization had been recorded for 2003 for a patent purchased on July 2, 2003. The patent was properly capitalized at P480,000 and had an estimated useful life of eight years when purchased. Catacutan is subject to 32% regular corporate income tax. The appropriate correcting entry was recorded on the same day.
Adjusted net income after tax for 2004 was P1,860,900.
Questions Based on the foregoing and the result of your audit, answer the following: 21. 22.
Preference share at December 31, 2004 is a. P 1,500,000 b. P 954,000 c. P 900,000
d. P 0
Ordinary share at December 31, 2004 is a. P 640,500 b. P 645,450
d. P 652,950
c. P 649,950
23. How much is the total additional paid-in-capital as of December 31, 2004 a. P 2,163,300 b. P 2,178,220 c. P 2,765,600 d. P 2,774,000 24. The adjusted balance of retained earnings on December 31,2004 is a. P 2,783,600 b. P 2,774,000 c. P 2,771,600 d. P 2,743,600
25.
How much is the total shareholders’ equity on December 31, 2004? a. P 6,376,850 b. P 4,271,550 c. P 4,232,550 d. P 4,194,350
Problem 6: You are examining the financial statements of MATIAS CORPORATION for the year ended December 31, 2006. During the audit of the accounts receivable and other related accounts, certain information was obtained. The December 31, 2006 debit balance in the Accounts Receivable control account is P197,000. The only entries in the Bad Debts Expense account were: a credit for P324 on December 31, 2006, because Marlisa Company remitted in full for the accounts charged off October 31, 2006, and a debit on December 31 for the amount of the credit to the Allowance for Doubtful Accounts. The Allowance for Doubtful Accounts schedule is presented below: Debit Credit January 1, 2006 October 21, 2006, Uncollectible; Marlisa Co., - P324; Abonales Co., - P 820; Cherryl Co., - P564 P 1,508 December 31, 2006, 5% of P197,000 P 9,850
Balance P 3,658 2,150 12,000
An aging schedule of the accounts receivable as of December 31, 2006 and the decision are shown in the table below: Age ____________ 0 – 1 month 1 – 3 months 3 – 6 months over 6 months
Net Debit Balance _________________ P
93,240 76,820 22,180 6,000
Amount to which the Allow. is to be adjusted after adjust. and corrections have been made 1 percent 2 percent 3 percent Definitely uncollectible, P1,000; P2,000 is considered 50% uncollectible; the remainder is estimated to be 80% collectible.
There is a credit balance in one account receivable (0-1 month) of P2,000; it represents an advance on a sales contract. Also, there is a credit balance in one of the 1-3 months accounts receivable of P500 for which merchandise will be accepted by the customer. The ledger accounts have not been closed as of December 31, 2006. The Accounts Receivable control account is not in agreement with the subsidiary ledger. The difference cannot be located, and the auditor decides to adjust the control to the sum of the subsidiaries after corrections are made. Questions 26. The adjusted balance of accounts receivable of MATIAS CORPORATION at December 31, 2006 is: a. P 199,740 b. P 199,540 c. P 198,300 d. P 198,100 27. The adjusted write-off of accounts receivable balance of MATIAS CORPORATION at December 31, 2006 is: a. P 2,708.00 b. P 2,508.00 c. P 2,384.00 d. P 1,708.00 28. The adjusted allowance of bad debts account of MATIAS CORPORATION at December 31, 2006 is: a. P 4,980.60 b. P 4,964.20 c. P 4,780.60 d. P 4,764.20
29. The bad debts expense per book of MATIAS CORPORATION at December 31, 2006 is: a. P 9,850.00 c. P 4,764.20 b. P 6,359.80 d. Cannot be determined 30. The adjusted bad debts expense of MATIAS CORPORATION at December 31, 2006 is: a. P 3,814.20 b. P 3,614.20 c. P 3,490.20 d. P 2,814.20 Problem 7: Branzuela Corporation reported the following amounts of net income for the years ended December 31, 2003, 2004 and 2005: 2003 2004 2005
P127,000 150,000 128,500
You are performing the audit for the year ended December 31, 2005. During your examination, you discover the following errors: a.
As a result of errors in the physical count, ending inventories were misstated as follows: December 31, 2004 December 31, 2005
P14,000 understated P23,000 overstated
b.
On December 29, 2005, Branzuela recorded as a purchase, merchandise in transit, which cost P15,000. The merchandise was shipped FOB Destination and had not arrived by December 31. The merchandise was not included in the ending inventory.
c.
Branzuela records sales on the accrual basis but failed to record sales on account made near the end of each year as follows 2003 2004 2005
d.
P4,000 5,000 3,500 The company failed to record accrued office salaries as follows:
December 31, 2003 December 31, 2004 e.
P10,000 14,000
On March 1, 2004, a 10% stock dividend was declared and distributed. The par value of the shares amounted to P10,000 and market value was P13,000. the stock dividend was recorded as follows: Miscellaneous expense Common stock Retained earnings
P13,000
10,000 3,000
f.
On July 1, 2004, Branzuela acquired a three-year insurance policy. The three-year premium of P6,000 was paid on that date, and the entire premium was recorded as insurance expense.
g.
On January 1, 2005, Branzuela retired bonds with a book value of P120,000 for P106,000. The gain was incorrectly deferred and is being amortized 10 years as a reduction of interest expense on other outstanding obligations.
Questions: 31.
a.
What is the adjusted net income for the year ended December 31, 2003? P133,000 b. P121,000 c. P117,000 d. P113,000
32.
What is the adjusted net income for the year ended December 31, 2004? a. P159,000 b. P160,000 b. P179,000 c. P187,000
33.
What is the adjusted net income for the year ended December 31, 2005? a. P129,600 b. P131,600 c. P139,600 d. P142,600
34.
What adjusting entry should be made on December 31, 2005 to correct the error described in item B? a. Accounts payable 15,000 Purchases 15,000 b. Purchases 15,000 Accounts payable 15,000 c. Accounts payable 15,000 Cash 15,000 d. Accounts payable 15,000 Retained earnings 15,000
35.
The adjusting entry on December 31, 2004 to correct the error described in item E should include a debit to a. Common stock P10,000 c. Additional paid in capital, P3,000 b. Retained earnings, P16,000 d. Miscellaneous expenses, P3,000
Problem 8: On December 31, 2006, DreamBig Company reported as Available-for-sale securities: Attitude Company, 5,000 shares of common stock (a 1% interest) IstheKEY Company, 10,000 shares of common stock (a 2% interest) 2Success Company, 25,000 shares of common stock (a 10% interest) Marketable equity securities, at cost Less: Valuation allowance Marketable equity securities, at market
P 125,000 160,000 700,000 P 985,000 50,000 P 935,000
Additional information:
On May, 2007, Attitude Company issued a 10% stock dividend when the market price of its stock was P24 per share.
On November 1, 2007, Attitude Company paid a cash dividend of P0.75 per share.
On August 5, 2007, IstheKEY Company issued to all shareholders, stock rights on the basis of one right per share. Market prices at date of issue were P13.50 per share (ex-right) of stock and P1.50 per rights. DreamBig Company sold all rights on December 16, 2007 for net proceeds of P18,800.
On July 1, 2007, DreamBig Company paid P1,520,000 for 50,000 additional shares of 2Success Company’s common stock which represented a 20% investment in 2Success Company. The fair value of all of the 2Success Company’s identifiable assets net of liabilities was equal to their carrying amount of P6,350,000. As a result of this transaction, DreamBig Company owns 30% of 2Success Company and can exercise significant influence over 2Success Company’s operating and financial policies.
DreamBig Company’s initial 10% interest of 25,000 shares of 2Success Company’s common stock was acquired on January 2, 2006 for P700,000. At that date, the net assets of 2Success Company totaled P5,800,000 and the fair value of 2Success’s identifiable assets net of liabilities was equal to their carrying amount.
Market prices per share of the marketable equity securities which were all listed in the stock exchange, were as follows: At December 31 2006 2007
Attitude Company - common IstheKEY Company – common 2Success Company – common
P 23 14 29
2Success Company reported net income and paid dividends of:
Year ended December 31. 2006 Six months ended June 30, 2007 Six months ended December 31, 2007 (dividend was paid on 10/1/07
P 22 15 27
Year Ended P350,000 200,000 370,000
Div. per Share none none P 1.30
There were no other intercompany transactions between DreamBig Company and 2Success Company and there were no impairment of 2Success Company’s asset at year-end.
Questions 36. The investment in Attitude Company common stock at year-end is: a. P 126,500 b. P 125,000 c. P 120,875 d. P 113,000 37. The investment in Isthekey Company common stock at year-end is: a. P 160,000 b. P 150,000 c. P 144,000 d. P 140,000 38. The investment in 2Success Company common stock at year-end is: a. P 2,288,500 b. P 2,270,250 c. P 2,264,000 d. P 2,175,000 39. The recovery of market decline to be reported in the income statement is: a. P 50,000 b. P 47,500 c. P 2,500 d. P
0
40. Gain on sale of stock rights is: a. P 3,600 b. P 2,800
0
c. P 1,200
d. P
Problem 9:Your audit client, Tortor Corporation, presents to you the unadjusted trial balance shown below, which was drawn from its general ledger as at June 30, 2006, the end of its fiscal year. TORTOR CORPORATION Unadjusted Trial Balance June 30, 2006 Cash 721,800 Trading Securities 200,000 Accounts receivable 2,128,000 Inventory, June 30, 2005 5,194,300 Invest. in associates (Equity Method) 1,200,000 Equipment 1,621,000 Prepaid expenses 116,200 Goodwill 500,000 Accounts payable 2,426,400 Accrued expenses 152,600 Accrued interest payable 226,000 Allowance for bad debts 36,100 Allowance for depreciation 450,700 Loans payable 2,500,000 Capital stock 3,000,000 Additional paid-in capital 260,000 Retained earnings 1,808,800 Sales 21,602,000 Interest income 140,000
Purchases Salaries and wages Rent, light and water Advertising Supplies Taxes Miscellaneous expenses Interest expense
13,928,000 3,250,000 750,000 400,000 300,000 250,000 1,793,300 250,000 32,602,600
_________ 32,602,600
Your examination of the accounts disclosed the following information: 1.
The cash account included an NSF check returned by the bank on June 30, 2006, but recorded as a cash reduction in July, 2006, P44,000, and a voucher for suppliers paid in cash on June 27, 2006 but not entered in the books, P26,500.
2.
Marketable Securities which cost P200,000 have a market value of P210,000. Investments have a market value of P1,250,000 as at balance sheet date.
3.
The company has been providing an allowance for bad debts at 5% of the outstanding customers’ balances. Uncollectible accounts were charged off against the allowance during the year.
4.
A physical inventory taken by management personnel of the merchandise stock at June 30, 2006 totaled P5,751,900. You were unable to observe the inventory-taking as your services were engaged only on July 15, 2006. Due to the condition of the accounting records and internal accounting controls, you were also unable to satisfy yourself as to the inventory.
5.
Equipment no longer needed (cost, P150,000; accumulated depreciation, P45,000) was sold for P100,000 cash on June 29, 2006; the cash proceeds were credited to the Equipment account. Equipment is depreciated at 10% a year on a monthly basis computed at year-end.
6.
Prepaid expenses included insurance premium of P30,000 paid on April 1, 2006 on a one-year fire insurance policy.
7.
Long-Term
Salaries unpaid as of June 30, 2006, P13,000 were not taken up under accrued expenses.
8.
The Goodwill account was set-up with a credit to Retained Earnings on the basis of a resolution of the Board of Directors.
9.
A 10% cash dividend declared on June 15, 2006, payable on July 31, 2006, has not been recorded.
10.
The Board of Directors approved a resolution on June 25, 2006 appropriating out of Retained Earnings the amount of P300,000 to meet possible future losses on inventories.
Questions 41. Cash for the fiscal year-ended June 30, 2006 is: a. P 633,800 b. P 651,300 c. P 677,800
d. P 695,300
42. Marketable securities for the fiscal year-ended June 30, 2006 is: a. P 0 b. P 190,000 c. P 200,000
d. P 210,000
43. Accounts receivable for the fiscal year-ended June 30, 2006 is: a. P 2,172,000 b. P 2,128,000 c. P 2,100,000
d. P 2,084,000
44. 45.
Allowance for doubtful accounts for the fiscal year-ended June 30, 2006 is: a. P 72,500 b. P 104,200 c. P 106,400 d. P 108,600 Inventory for the fiscal year-ended June 30, 2006 is:
a. P 5,751,900 b. P 5,194,300
c. P 4,636,700 d. Cannot be determined.
46. Equipment for the fiscal year-ended June 30, 2006 is: a. P 1,671,000 b. P 1,571,000 c. P 1,621,000
d. P 1,566,000
47. Accumulated depreciation for the fiscal year-ended June 30, 2006 is: a. P 390,700 b. P 552,800 c. P 562,800 d. P 622,800 48. Retained earnings before net income for the fiscal year-ended June 30, 2006 is: a. P 708,800 b. P 1,008,800 c. P 1,308,800 d. P 1,508,000 49. Retained earnings after net income for the fiscal year-ended June 30, 2006 is: a. P 2,639,700 b. P 2,405,500 c. P 1,840,500 d. P 1,805,500 50. The auditor should issue a(an): a. Unqualified Opinion b. Unqualified Opinion with explanatory paragraph
c. Qualified Opinion d. Adverse Opinion
