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WP 2009
REF.
ASSETS
Cash & Cash Equivalents C 160,000.00
Financial Assets D 1,010,000.00
Trade & Other Receivables, net E 9,450,000.00
Merchandise Inventory F 700,000.00
Prepayment & Other Current Assets G 310,000.00
Property, Plant & Equipment, net K 61,180,000.00
Intangibles L 1,000,000.00
TOTAL ASSETS 73,810,000.00
LIABILITIES AND EQUITY

Liabilities
Trade & Other Payables N 1,014,000.00
Notes Payable O 0.00
VAT Payable P 0.00
Income Tax Payable Q 0.00
Total Liabilities 1,014,000.00
Equity
Shareholder's Equity T -
TOTAL LIABILITIES AND EQUITY 1,014,000.00
December 31
STATEMENT OF FINANCIAL POSITION
PAJE
2010 2011
Debit Credit
1,100,000.00 4,710,930.00 10,026,529.00 505,300.00

1,150,000.00 9,500,000.00 8,130,000.00 8,585,000.00
13,750,000.00 12,829,677.00 2,750,442.71 3,832,225.00
900,000.00 4,402,787.00 370,773.00 619,255.45
500,000.00 400,000.00 0.00 0.00
61,180,000.00 78,549,000.00 0.00 6,802,581.00
1,000,000.00 800,000.00 0.00 800,000.00
79,580,000.00 111,192,394.00 ### ###
1,050,500.00 10,734,675.00 0.00 457,850.00

0.00 0.00 0.00 0.00
0.00 913,910.00 0.00 0.00
0.00 0.00 0.00 0.00
1,050,500.00 11,648,585.00 0.00 457,850.00
- - - -
1,050,500.00 11,648,585.00 0.00 457,850.00
31
IAL POSITION BS
Audited Balance Difference % Change
14,232,159.00 13,132,159.00 1193.83%

9,045,000.00 7,895,000.00 686.52%
11,747,894.71 (2,002,105.29) 29.55%
4,154,304.55 3,254,304.55 361.59%
400,000.00 (100,000.00) -20.00%
71,746,419.00 10,566,419.00 17.27%
0.00 (1,000,000.00) -100.00%
111,325,777.26 31,745,777.26 39.89%
11,125,960.00 10,075,460.00 959.11%

0.00 0.00 0.00%
- 0.00 0.00%
- 0.00 -%
11,125,960.00 10,075,460.00 959.11%
- 0.00 0.00%
11,125,960.00 10,075,460.00 959.11%
INC
WP
REF. 2009 2010
Net Sales UA 0.00 0.00

Less: Cost of Sales VA 0.00 0.00
Gross Profit 0.00 0.00
Less: Operating Expenses VB 0.00 0.00
Net Operating Income 0.00 0.00
Add/Less: Other Income and Exp UB 0.00 0.00
Less: Finance Cost VC 0.00 0.00
Net Income Before Income Tax 0.00 0.00
Income Tax Expense (30%) 0.00 0.00
Net Income After Income Tax 0.00 0.00
December 31
INCOME STATEMENT
AUDITED
2011 PAJE
BALANCE 2011
DEBIT CREDIT
0.00 0.00 0.00 0.00
0.00 0.00 0.00 0.00
0.00 0.00
0.00 0.00 0.00 0.00
0.00 0.00
0.00 0.00 0.00 0.00
0.00 0.00 0.00 0.00
0.00 0.00 0.00 0.00
0.00 0.00 0.00 0.00
0.00 0.00 0.00 0.00
IS
DIFFERENCE % CHANGE
0.00 0.00%
0.00 0.00%
0.00 #DIV/0!
0.00 0.00%
0.00 #DIV/0!
0.00 0.00%
0.00 0.00%
0.00 #DIV/0!
0.00 -%
0.00 #DIV/0!
WP
ACCOUNT NUMBER ACCOUNT NAME
REF.
101 Cash in Bank C

102 Petty Cash C
103 Marketable Securities D
104 Accounts Receivable E
Accounts Receivable - Others E
104-A Allowance for Bad debts E
105 Notes Receivable E
106 Merchandise Inventory F
107 Accrued Interest Receivable E
108 Prepaid Advertising G
109 Prepaid Insurance G
110 Unused Supplies G
111 Input Tax P
201 Land K
202 Building K
202-A Accumulated Depreciation - Building K
203 Furniture and Fixture K
203-A Accumulated Depreciation - Furniture and Fixtu K
204 Transportation Equipment K
204-A Accumulated Depreciation - Transportation Eq K
205 Office Equipment K
205-A Accumulated Depreciation - Office Equipment K
301 Organization Cost L
1001 Accounts Payable N
1002 Notes Payable O
1003 Notes Payable - Officer O
1004 SSS Medicare Premium Payable N
1005 Withholding Taxes Payable N
1006 HDMF Premiums Payable N
1007 Accrued Interest Payable N
1008 Output Tax P
2001 Ordinary Share Capital T
2002 Subscribed Ordinary Share T
2003 Subscription Receivable - Ordinary Share Capita T
2004 Premium in Excess of Par Value - Ordinary Shar T
2005 Retained Earnings T
3001 Sales UA
3002 Sales Discount UA
3003 Sales Returns and Allowances UA
3004 Interest Income UB
3005 Purchase Discount VA
4001 Cost of Sales VA
4002 Salaries Expense VB
4003 Supplies Expense VB
4004 Taxes and Licenses VB
4005 SSS Medicare Premium Expense VB
4006 HDMF Premium Expense VB
4007 Gasoline Expense VB
4008 Light, Water and Telephone VB
4009 Depreciation Expense - Building VB
4010 Depreciation Expense - Furniture and Fixture VB
4011 Depreciation Expense - Transportation Equipm VB
4012 Depreciation Expense - Office Equipment VB
4013 Amortization of Organization Cost VB
4014 Bad Debts Expense VB
4015 Representation Expense VB
4016 Advertising Expense VB
4017 Insurance Expense VB
4018 Miscellaneous Expense VB
4019 Interest Expense VC
TOTAL
December 31
TRIAL BALANCE
ADJUSTED BALANCE 2009 ADJUSTED BALANCE 2010

Debit Credit Debit Credit
150,000.00 1,000,000.00
10,000.00 100,000.00
1,010,000.00 1,150,000.00
4,650,000.00 5,850,000.00
4,200,000.00 6,400,000.00
600,000.00 1,500,000.00
700,000.00 900,000.00
50,000.00 120,000.00
60,000.00 80,000.00
200,000.00 300,000.00
450,000.00 600,000.00
### ###
### ###
3,550,000.00 3,550,000.00
6,000,000.00 6,000,000.00
2,130,000.00 2,130,000.00
1,000,000.00 1,000,000.00
900,000.00 906,500.00
### 21,000,000.00
52,000.00 62,000.00
40,500.00 52,500.00
21,500.00 29,500.00
600,000.00 1,000,000.00
### 45,000,000.00
3,500,000.00 3,500,000.00
### 54,539,000.00
200,000.00 300,000.00
650,000.00 800,000.00
80,000.00 110,000.00
### ###
6,253,000.00 7,000,000.00
67,000.00 108,000.00
750,000.00 900,000.00
210,000.00 270,500.00
70,000.00 100,000.00
86,500.00 100,000.00
184,000.00 210,000.00
230,000.00 280,000.00
113,000.00 132,000.00
207,000.00 318,000.00
170,000.00 200,000.00
60,000.00 70,000.00
364,500.00 445,500.00
### ### ### ###
TB
UNADJUSTED BALANCE 2011 INITIAL INCREASE /
(DECREASE)
Debit Credit 2011 VS 2010
4,709,230.00 3,709,230.00
1,700.00 (98,300.00)
9,500,000.00 8,350,000.00
10,318,635.00 4,468,635.00
(6,400,000.00)
497,811.00 497,811.00
2,970,000.00 1,470,000.00
4,402,787.00 3,502,787.00
38,853.00 38,853.00
50,000.00 (70,000.00)
50,000.00 (30,000.00)
300,000.00 0.00
1,556,422.00 956,422.00
16,500,000.00 0.00
53,000,000.00 20,000,000.00
650,000.00 650,000.00
3,550,000.00 0.00
355,000.00 355,000.00
6,000,000.00 0.00
1,200,000.00 1,200,000.00
2,130,000.00 0.00
426,000.00 426,000.00
800,000.00 (200,000.00)
5,124,090.00 4,217,590.00
3,506,500.00 (17,493,500.00)
1,700,000.00 1,700,000.00
144,720.00 82,720.00
129,600.00 77,100.00
63,200.00 33,700.00
66,565.00 66,565.00
2,470,332.00 1,470,332.00
70,000,000.00 25,000,000.00
5,000,000.00 5,000,000.00
2,625,000.00 2,625,000.00
5,250,000.00 1,750,000.00
4,481,456.00 4,481,456.00
112,152,313.00 57,613,313.00
866,435.00 566,435.00
1,041,475.00 241,475.00
248,853.00 138,853.00
4,520.00 4,520.00
56,646,887.00 21,861,387.00
24,022,840.00 17,022,840.00
1,411,862.00 1,303,862.00
910,000.00 10,000.00
1,270,500.00 1,000,000.00
1,100,000.00 1,000,000.00
1,146,000.00 1,046,000.00
1,223,000.00 1,013,000.00
650,000.00 650,000.00
355,000.00 355,000.00
1,200,000.00 1,200,000.00
426,000.00 426,000.00
200,000.00 200,000.00
497,811.00 217,811.00
120,000.00 (12,000.00)
820,520.00 502,520.00
550,000.00 350,000.00
397,938.00 327,938.00
112,065.00 (333,435.00)
### ### 87,271,460.00
STATEMENT OF C
For The Mont
December 3
Cash flows from operating activities

Cash receipts from customers 9,017,125.00
Cash paid to suppliers 4,118,755.00
Cash paid to employees 2,144,540.00
Cash paid for operating expenes 56,671.00
Cash generated from operations 2,697,159.00
Interest paid 0.00

Income taxes paid 0.00
Net cash from operating activities
Cash flows from investing activities 0.00

Purchase of property, plant, and equipment 0.00
Proceeds from sale of equipment 0.00
Net cash used in investing activities
Cash flows from financing activities

Proceeds from issuance of common stock 2,625,000.00
Proceeds from issuance of long-term debt 7,900,000.00
Principal payments under capital lease obligation 0.00
Dividends paid 0.00
Net cash used in financing activities
Net increase in cash and cash equivalents

Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period
STATEMENT OF CASH FLOWS
For The Month Ended,
December 31, 2011
CF
2,697,159.00
0.00
10,525,000.00
13,222,159.00
1,010,000.00
14,232,159.00
December 31,2011
SUMMARIZED PROPOSED
ADJUSTING ENTRIES
WP REF. PAJE
C1 1 Receivable from Cash Custodian
Light, Water and Telephone
To record cash payment.
2 Receivable from officer/employees

Petty Cash Fund
To record advances to employees.
3 Petty Cash Fund

Miscellaneous Income
To record cash overage.
C2 1 Cash in Bank
Accounts Receivable - Louie Tan
Accounts Receivable - Benitez Merchandising
Accounts Receivable - Susan de Leon
To record undeposited receipts on December.
2 Accounts Receivable
Cash in Bank
To record NSF Check #4825.
3 Cash in Bank
Accounts Receivable
To record redeposit of PCIB Check #4825.
4 Cash in Bank
Interest Expense
Notes Receivable
To record collection of notes receivable.
5 Cash in Bank
Discount on Notes Payable
Notes Payable
To record proceeds of promissory note.
6 Miscellaneous Expense
Cash in Bank
To record bank service charges.
D1 1 Marketable Securities
Gain on sale of Marketable Securities
To correct Marketable Securities account
2 Investments in Time Deposits

Marketable Securities
To reclassify the Time Deposits
3 Marketable Securities
To correct the credit to
Gain on sale
marketable of Marketable
secrutities Securities
from sale
of A. Soriano shares
4 Loss from Decrease in Fair Value- Philex Mining

Loss from Decrease in Fair Value- Omico
Gain from increase in Fair Value - PLDT
Gain from increase in Fair Value - San Miguel
To record changes in fair
value
E1 1 Accounts Receivable - Gwendo Reyes

Accounts Payable - Gwendo Reyes
To eliminate negative balance in Gwendo Reyes' acc
2 Receivable from Employees - Anna Reyes

Accounts Receivable - Anna Reyes (employee)
To reclassify accounts appropriately.
E2 1 Accounts Receivable JR Alano Trading

Accounts Receivable JR Alano
To remove the double recording of JR Alano
Trading's account
2 Sales
Accounts
To adjust Receivable JR Alano
JR Alano Trading's Tradingto the right
account
balance
E4 1 Allowance for bad debts

Bad Debts Expense
To record an allowance for bad debts.
E5 1 Accrued Interest Receivable

Interest Income
To record accrued interest income.
F1 1 Cost of Goods Sold

Merchandise Inventory
F7 1 Cash
Sales
Output Tax
To record sales made to Eagle Contractors
2 Cost of goods sold

To record cost of sale
3 Cash
Sales
Output Tax
To record sales made to Dynasty Corporation

5 Accounts Receivable
Sales
Output Tax
To record credit sales made to Benitez Merchandising

7 Merchandise Inventory
Input VAT Payable
Accounts Payable
To record purchase of inventoryfrom Genius Paper Pr
8 Merchandise Inventory
Input VAT Payable
Accounts Payable
To record purchase of inventory from Arboleda comp
F8B 1 Inventory Shrinkage

To record inventory shrinkage.
2 Allowance for Inventory Write-Down

To reduce allowance for inventory write-down.
K5 1 Retained Earnings
Depreciation Expense - Building
Depreciation Expense - Furniture and Fixture
Depreciation Expense - Transportation Equipment
Depreciation Expense - Office Equipment
Accumulated Depreciation-Building
Accumulated Depreciation-Furniture and Fixture
Accumulated
To adjust the Depreciation-Transportation Equipment
beginning balance of Accumulated
Accumulated Depreciation-Office Equipment
Depreciation and to adjust the the appropriate
depreciation expense for the period
L1 1 Retained Earnings
Amortization of Organization
To eliminate Organization Cost
Cost account in
Organization Cost
accordance with PAS 38 and related amortization
expense
N5 1 Taxes and Licenses

Property Taxes Payable
To record accrued property tax.
2 Light, Water & Electricity

Utilities Payable
To record accrued property tax
3 Salaries Expense
Employee Bonus Payable
To record accrued property tax
O2 1 Interest Expense
Accrued
To adjustInterest Payable
the interest expense to the correct
amount
P1 1 Sales
Output Tax
To adjust 10% Output Tax to 12%.
2 Input Tax
To adjust 10% Input Tax to 12%.
3 Output Tax
Input Tax
VAT Payable
To record VAT Payable.
Q1 1 Retained Earnings
Income Tax Payable
To record prior period error
2 0
Income Tax Payable
To record Income tax expense
T3 1 Retained Earnings
Cash Dividends Payable
Subscription Receivable - Ordinary Share Capital
To record 10% cash divedends declared.
VB1 1 0
0 To record operating expenses
Salaries Expense
incurred for the month of
December 2011
2 To record representation
Representation Expense
expense incurred during the
Accrued Representation Payable
year but paid in the subsequent
year.
TOTAL
31,2011
PROPOSED
ENTRIES
PAJE
Debit Credit
P 800.00 P
800.00
2,800.00
2,800.00
2,504.00
2,504.00
782,225.00
484,000.00
Merchandising 93,750.00
de Leon 204,475.00
s on December.
500,000.00
500,000.00
500,000.00
500,000.00
heck #4825.
490,000.00
10,000.00
500,000.00
eceivable.
7,900,000.00
2,100,000.00
10,000,000.00
ory note.
2,500.00
2,500.00
500,000.00
500,000.00
6,500,000.00
6,500,000.00
1,130,000.00
1,130,000.00
hilex Mining 700,000.00

1,781,000.00
alue - PLDT 316,000.00
alue - San Miguel 80,000.00
2,085,000.00
50,000.00
50,000.00
in Gwendo Reyes' account
300,000.00
eyes (employee) 300,000.00
1,600,000.00
1,600,000.00
ng of JR Alano
150,000.00
ccount to the right 150,000.00
5,190.50
5,190.50
59,652.21
59,652.21
5,661.25
5,661.25
165,550.00
150,500.00
15,050.00
Contractors
103,409.00
103,409.00
186,250.00
169,318.00
16,932.00
sty Corporation
114,181.00
114,181.00
232,000.00
210,909.00
21,091.00
o Benitez Merchandising
145,455.00
145,455.00
229,318.00
22,932.00
252,250.00
ryfrom Genius Paper Products
141,455.00
14,145.00
155,600.00
ry from Arboleda company, Inc.
6,350.00
6,350.00
244,199.20
244,199.20
tory write-down.
2,380,499.92
2,731,081.08
d Fixture 670,000.00
portation Equipment -600,000.00
Equipment -421,000.00
4,556,081.00
niture and Fixture 1,320,000.00
nsportation
ce Equipment
of Accumulated 300,000.00
ffice Equipment
the appropriate 626,500.00
period
1,000,000.00
t account in 200,000.00
elated amortization 800,000.00
0.00
0.00
x.
0.00
0.00
x
0.00
0.00
x
0.00
to the correct 0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
nary Share Capital 0.00
s declared.
0.00
0.00
0.00
0.00
0.00
33,459,158.16 33,459,158.16
BALANCE
ACCOUNT NUMBERACCOUNT NAMEWP REF.
2009
101 Cash in Bank C 150,000.00
102 Petty Cash C 10,000.00
TOTAL 160,000.00
December 31
LEAD SCHEDULE - CASH
BALANCE UNADJUSTED PAJE AUDITED

2010 BALANCE 2011 Debit Credit BALANCE
1,000,000.00 4,709,230.00 10,024,025.00 502,500.00 ###
100,000.00 1,700.00 2,504.00 2,800.00 1,404.00
1,100,000.00 ### 10,026,529.00 505,300.00 ###
C
DIFFERENCE % CHANGE
13,230,755.00 1323.08%
(98,596.00) -98.60%
### ###
Audit Objectives
1. To ascertain that the Petty Cash Fund and Cash on Hand exist.
2. To ascertain that Petty Cash Fund and Cash on Hand are correctly valued.
Assertions Affected
1. Existence
2. Valuation
Audit Procedures
1. Obtained the cash and negotiable instruments from the custodian/cashier.
2. Controlled all cash and negotiable instruments held by the client until all funds hav
3. Insisted that the custodian of the cash be present throughout the count.
4. Started to do the cash count.
5. Obtained a signed receipt from the custodian to check if the amounts are match.
6. Ascertain that all undeposited checks are not post-dated, not stale and are payable
7. Returned all the cash and all other things obtained earlier to the cashier/custodian.
Findings
BILLS
FRACTIONAL DENOMINATION
TOTAL BILLS AND FRACTIONAL DENOMINATIONS

CASH ITEMS
Checks for deposit
Date
12.28.2011
12.30.2011
12.30.2011
12.31.2011
12.31.2011
Unreplenished Vouchers
Date
12.10.2011
12.10.2011
12.15.2011
12.18.2011
12.20.2011
12.21.2011
12.29.2011
Advances and IOUs
Date
12.29.2011
12.29.2011
Total Amount of Fund Per Count
Total Amount of Fund Per Books or Receipt
Overage
I hereby certify that the above fund of P1

at 8:00 and was returned to me as it is.
1. The PNB Check #203 is a post-dated check.

2. The list contained an error pertaining to the FEBTC check #408 amoun
3. The telephone bill pertaining to petty cash book with voucher #802 doe
PAJE 1 Receivable from Cash Custodian
Light, Water and Teleph
To record cash payment.
4. The check for deposit is number with OR #118-122

5. The unreplenished vouchers are numbered 801,803-807
6. The IOUs are voucher numbered 807-808.
PAJE 2 Receivable from officer/employees
Petty Cash Fund
To record advances to employees.
7. The disbursements recorded and paid are more than the available petty
PAJE 3 Petty Cash Fund
Miscellaneous Income
To record cash overage.
Conclusions
No exceptions noted.
Legend
a Footed
b Amount from OR# 119
December 31,2011
CASH COUNT
correctly valued.
custodian/cashier.
he client until all funds have been counted.
hout the count.
the amounts are match.

, not stale and are payable to the order of the client either directly or through endorsement.
r to the cashier/custodian.
Cash Count Sheet

January 5 2012
Denomination Quantity Amount

P 500.00 1 500.00
200.00 1 200.00
100.00 2 200.00
50.00 3 150.00
20.00 5 100.00
P 10.00 9 90.00
5.00 20 100.00
1.00 60 60.00
0.10 40 4.00
Maker/Drawer Payee
Louie Tan Grace Corp. 484,000.00
Eagle Contractor Grace Corp. 165,550.00
Dynasty Construction Grace Corp. 186,250.00
Benitez Merchandising Grace Corp. 93,750.00
Susan de Leon Grace Corp. 204,475.00
Payee Particulars
Luigi's Deli Representation Expense C1.2 2,000.00
Mobilshel Gsoline Station Gasoline C1.2 2,050.00
PLDT Telephone Bill C1.2 800.00
Mr. Jose Castro Transportation Expense C1.2 250.00
Manila Water and Sewerage Sy Water Bill C1.2 500.00
Bureau of Post Stamps C1.2 150.00
Mobilshel Gsoline Station Gasoline C1.2 2,550.00
Payee
Maricel Pastor C1.2 2,550.00
Jon Sandoval C1.2 250.00
Petty Cash Fund per Ledger C1.3 10,000.00

Undeposit Collections ###
that the above fund of P1,145,729.00 was counted in my pre_______________________ on January 5, 201
s returned to me as it is.
Signature of Cashier
FEBTC check #408 amounting to P165,560 while in the OR # 119 the amount receipt is only P165,550.
ok with voucher #802 does not have any supporting documents.
800.00
800.00
payment.
01,803-807
2,800.00
2,800.00
nces to employees.
re than the available petty cash fund.

2,504.00
2,504.00
overage.
C1
Total
1,150.00 a
254.00 a
1,404.00
b
1,134,025.00 a
8,300.00 a
2,800.00 a
### a
### a
2,504.00
on January 5, 2012
re of Cashier
t is only P165,550.
Prepared by: Date:
SPR 1/7/2012
ARC 1/7/2012
Reviewed by: Date:

MFL 1/9/2012
OFFICIAL RECEIPTS
Gra CORPORATION
OFFICIAL RECEIPT No.
ce
12 Ninoy Aquino Avenue, Paranaque City |
VAT 2011-002-148 | TIN 4004-009-175 Telefax: 632 843 7690 | Website: www.grace
Received from:
Legarda Company
The sum of:

Two hundred twenty four thousand five hundred pesos only
In settlement of:
Invoice # 1121
Cash: P
Checks:
PNB 481853 P 224,500.00
Total P 224,500.00
Received by:
Gra CORPORATION
ce
Received from:
Susan de Leon
The sum of:
One million thirty eight thousand eight hundred pesos only
In settlement of:
Invoice # 1125
Cash: P
Checks:
RCBC 329864 P 1,038,800.00
Total P 1,038,800.00
Received by:
Gra CORPORATION
ce
Received from:
Benitez Merchandising
The sum of:

Three hundred sixty two thousand six hundred pesos only
In settlement of:
Invoice # 1135
Cash: P
Checks:
SBTC 928421 P 362,600.00
Total P 362,600.00
Received by:
Gra
Gra OFFICIAL RECEIPT No.
ce
CORPORATION 12 Ninoy Aquino Avenue, Paranaque City |
Received from:
Johann Morales
The sum of:

Five hundred thousand pesos only
In settlement of:
Invoice # 1133
Cash: P
Checks:
PCIBank 4825 P 500,000.00
Total P 500,000.00
Received by:
Gra CORPORATION
ce
Received from:
Solomon Enterprises
The sum of:

Four hundred ninety thousand pesos only
In settlement of:
Invoice # 1149
Cash: P
Checks:
CBC 123498 P 490,000.00
Total P 490,000.00
Received by:
Gra CORPORATION
ce
Received from:
Eagle Contractors
The sum of:

Two hundred forty one thousans eight hundred eighty eight pesos only
In settlement of:
Invoice # 1251
Cash: P
Checks:
RCBC 728465 P 241,888.00
Total P 241,888.00
Received by:
Gra CORPORATION
ce
Received from:
Ida Coronel
The sum of:

Five hundred twenty eight thousand pesos only
In settlement of:
Invoice # 1152
Cash: P
Checks:
BPI 249169 P 528,000.00
Total P 528,000.00
Received by:
Gra CORPORATION
ce
Received from:
Luli Samson
The sum of:

Eight hundred forty five thousand pesos only
In settlement of:
Invoice # 1231
Cash: P
Checks:
BPI 249169 P 845,000.00
Total P 845,000.00
Received by:
Gra CORPORATION
ce
Received from:
Valera Company
The sum of:

Four hundred ten thousand pesos only
In settlement of:
Invoice # 1070
Cash: P
Checks:
RCBC # 876521 P 410,000.00
Total P 410,000.00
Received by:
Gra CORPORATION
ce
Received from:
Sampollo Company
The sum of:

Fifty six thousand eight hundred seventy four pesos only
In settlement of:
Invoice # 1253
Cash: P 56, 874.00
Checks:
P
Total P 56,874.00
Received by:
Gra CORPORATION
ce
Received from:
Cora Tayag
The sum of:

Seven hundred fifty seven thousand five hundred pesos only
In settlement of:
Invoice # 1100
Cash: P
Checks:
PCIBank 246810 P 757,500.00
Total P 757,500.00
Received by:
Gra CORPORATION
ce
Gra
ce
Received from:
Susan de Leon
The sum of:

Six hundred eighty one thousand pesos only
In settlement of:
Invoice # 1242
Cash: P
Checks:
RCBC 369125 P 681,000.00
Total P 681,000.00
Received by:
Gra CORPORATION
ce
Received from:
The sum of:

Nine hundred eighty thousand pesos only
In settlement of:
Invoice # 1254, 1255
Cash: P
Checks:
PCIBank 481265 P 980,000.00
Total P 980,000.00
Received by:
Gra CORPORATION
ce
Received from:
Building Blocks, Inc.
The sum of:

One hundred eighty seven thousand two hundred pesos only
In settlement of:
Invoice # 1259, 1260
Cash: P
Checks:
PNB 510152 P 187,200.00
Total P 187,200.00
Received by:
Gra CORPORATION
ce
Received from:
Dynasty Construction
The sum of:

Four thousand six hundred twenty five pesos only
In settlement of:
Invoice # 1252
Cash: P 4,625
Checks:
P
Total P 4,625.00
Received by:
Gra CORPORATION
ce
Received from:
M. Paredes
The sum of:

Two million six hundred twenty five thousand pesos only
In settlement of:
Subscription Fee
Cash: P
Checks:
RCBC 481216 P 2,625,000.00
Total P 2,625,000.00
Received by:
Gra CORPORATION
ce
Gra
ce
Received from:
Luli Samson
The sum of:

Eighty five thousand one hundred thirteen pesos only
In settlement of:
Invoice # 1257
Cash: P
Checks:
P 85,113.00
Total P 85,113.00
Received by:
Gra CORPORATION
ce
Received from:
Louie Tan
The sum of:

Four hundred eighty four thousand pesos only
In settlement of:
Invoice # 1240
Cash: P
Checks:
PCIB 2255 P 484,000.00
Total P 484,000.00
Received by:
Gra CORPORATION
ce
Received from:
Eagle Contractos
The sum of:

One hundred sixty five thousand five hundred fifty pesos only
In settlement of:
Invoice # 1264
Cash: P
Checks:
FEBTC 408 P 165,550.00
Total P 165,550.00
Received by:
Gra CORPORATION
ce
Received from:
Dynasty Construction
The sum of:

One hundred eighty six thousand two hundred fifty pesos only
In settlement of:
Invoice # 1265
Cash: P
Checks:
PNB 1122 P 186,250.00
Total P 186,250.00
Received by:
Gra CORPORATION
ce
Received from:
The sum of:

Ninety three thousand seven hundred fifty pesos only
In settlement of:
Cash: P
Checks:
PCIB 4425 P 93,750.00
Total P 93,750.00
Received by:
Gra OFFICIAL RECEIPT No.
ce
Gra CORPORATION 12 Ninoy Aquino Avenue, Paranaque City |
ce
Received from:
Susan de Leon
The sum of:

Two hundred four thousand four hundred seventy five pesos only
In settlement of:
Cash: P
Checks:
FEBTC 775 P 204,475.00
Total P 204,475.00
Received by:
Gra CORPORATION
ce
Received from:
Luli Samson
The sum of:

Twenty nine thousand seven hundred twenty five pesos only
In settlement of:
Invoice # 1268
Cash: P
Checks:
PCIB 2277 P 29,725.00
Total P 29,725.00
Received by:
C1.1
RECEIPT No. 101
Ninoy Aquino Avenue, Paranaque City | Tel: 632 843 7689
fax: 632 843 7690 | Website: www.gracecorporation.biz.ph
Date:
December 1,2011
Invoice no. Amount

1121 224,500.00
TOTAL 224,511.00
RECEIPT No. 102

Date:
December 1,2011
Invoice no. Amount
1125 1,600,000.00
less:
discount (21,200.00)
TOTAL 1,578,800.00
RECEIPT No. 103

Date:
December 5,2011
Invoice no. Amount

1125 370,000.00
discount (7,400.00)
TOTAL 362,600.00
RECEIPT No. 104
Date:
December 8,2011
Invoice no. Amount

1133 500,000.00
TOTAL 500,000.00
RECEIPT No. 105

Date:
December 8,2011
Invoice no. Amount

1149 520,000.00
less: returns (20,000.00)
discount (10,000.00)
TOTAL 490,000.00
RECEIPT No. 106

Date:
December 11,2011
Invoice no. Amount

1251 246,825.00
less: discoun (4,937.00)
TOTAL 241,888.00
RECEIPT No. 107

Date:
December 12,2011
Invoice no. Amount

1152 528,000.00
TOTAL 528,000.00
RECEIPT No. 108

Date:
December 12,2011
Invoice no. Amount

1231 845,000.00
TOTAL 845,000.00
RECEIPT No. 109
Date:
December 15,2011
Invoice no. Amount

1070 410,000.00
TOTAL 410,000.00
RECEIPT No. 110

Date:
December 12,2011
Invoice no. Amount

1253 58,035.00
TOTAL 56,874.00
RECEIPT No. 111

Date:
December 17,2011
Invoice no. Amount

1100 757,500.00
TOTAL 757,500.00
RECEIPT No. 112


Date:
December 1,2011
Invoice no. Amount

1242 681,000.00
TOTAL 681,000.00
RECEIPT No. 113

Date:
December 20,2011
Invoice no. Amount

1254 711,950.00
1255 309,525.00
total 1,021,475.00
less:
returns (21,475.00)
discounts (20,000.00)
TOTAL 2,001,475.00
RECEIPT No. 114
Date:
December 23,2011
Invoice no. Amount

1259 75,805.00
1260 111,395.00
TOTAL 187,200.00
RECEIPT No. 115

Date:
Invoice no. Amount

1252 4,625.00
TOTAL 4,625.00
RECEIPT No. 116

Date:
December 26,2011
Invoice no. Amount

Subscription
Payment 2,625,000.00
TOTAL 2,625,000.00
RECEIPT No. 117

Date:
December 26,2011
Invoice no. Amount

1257 86,850.00
TOTAL 85,113.00
RECEIPT No. 118

Date:
December 28,2011
Invoice no. Amount

1240 484,000.00
TOTAL 484,000.00
RECEIPT No. 119

Date:
December 30,2011
Invoice no. Amount

1264 165,550.00
TOTAL 165,550.00
RECEIPT No. 120

Date:
December 30,2011
Invoice no. Amount

1265 186,250.00
TOTAL 186,250.00
RECEIPT No. 121

Date:
31-Dec-11
Invoice no. Amount

1266 93,750.00
TOTAL 93,750.00
RECEIPT No. 122

Date:
31-Dec-11
Invoice no. Amount

1258 204,475.00
TOTAL 204,475.00
RECEIPT No. 123

Date:
January 3,2005
Invoice no. Amount

1268 29,725.00
TOTAL 29,736.00
PETTY CASH VOUCHERS
PETTY CASH VOUCHER
TO: LUIGI'S DELI
PARTICULARS
Representation Expense
TOTAL
APPROVED BY: PAID BY:
__________________________ __________________________
PETTY CASH VOUCHER
TO: MOBILSHEL GASOLINE STATION
PARTICULARS
Gasoline expense for delivery of merchandise

to Benitez Merchandising
TOTAL
__________________________ __________________________
PETTY CASH VOUCHER
TO: MR. JOSE CASTRO
PARTICULARS
Transportation expense
taxi fare
TOTAL
__________________________ __________________________
PETTY CASH VOUCHER
TO: MANILA WATER WORKS & SEWERAGE SYSTEM (MWSS)
PARTICULARS
Water Bill
TOTAL
__________________________ __________________________
PETTY CASH VOUCHER
TO: BUREAU OF POSTS
PARTICULARS
Stamps
TOTAL
__________________________ __________________________
PETTY CASH VOUCHER
TO: MOBILSHEL GASOLINE STATION
PARTICULARS
Gasoline expense
premium gasoline
TOTAL
__________________________ __________________________
PETTY CASH VOUCHER
TO: JON SANDOVAL
PARTICULARS
I.O.U.
TOTAL

__________________________ __________________________
PETTY CASH VOUCHER
TO: MARICEL PASTOR
PARTICULARS
I.O.U.
TOTAL
__________________________ __________________________
C1.2
NO. 0801
DATE December 10, 2011
AMOUNT
P 2,000.00
P 2,000.00
RECEIVED BY:
__________________________
NO. 0802
AMOUNT
P 2,050.00
P 2,050.00
RECEIVED BY:
__________________________
NO. 0803
AMOUNT
P 250.00
P 250.00
RECEIVED BY:
__________________________
NO. 0804
AMOUNT
P 250.00
P 250.00
RECEIVED BY:
__________________________
NO. 0805
AMOUNT
P 150.00
P 150.00
RECEIVED BY:
__________________________
NO. 0806
AMOUNT
P 2,550.00
P 2,550.00
RECEIVED BY:
__________________________
NO. 0808
AMOUNT
P 250.00
P 250.00
RECEIVED BY:
__________________________
NO. 0807
AMOUNT
P 2,550.00
P 2,550.00
RECEIVED BY:
__________________________
GENERAL LEDGER - ASSET
ACCOUNT Cash in Bank ACCOUNT NO.
DATE ITEM F DEBIT DATE ITEM F CREDIT

2011
Nov. 30 Balance P ### GJ 12 P
Dec. 30 CR 12 ### Dec. 31
Balance ###
ACCOUNT Petty Cash ACCOUNT NO.

2011
Nov. 30 Balance P 10,000.00 C1 Dec. 31 GJ 12 P
Balance 1,700.00
ACCOUNT Marketable Securities ACCOUNT NO.

2011
Nov. 30 Balance P ###
ACCOUNT Accounts Receivable ACCOUNT NO.

2011
Nov. 30 Balance P ### Dec. 5 GJ 11 P
Dec. 31 SJ 12 ### 8 GJ 11
31 CR 12
13 GJ 11
Balance ###
ACCOUNT Allowance for Bad Debts ACCOUNT NO.

2011
Dec. 31 GJ 11 P
ACCOUNT Notes Receivable ACCOUNT NO.

2011
Dec. 8 GJ 11 470,000.00
Balance ###
ACCOUNT Merchandise Inventory ACCOUNT NO.

2011 2011
Nov. 30 Balance P 799,971.00 Dec. 30 GJ 13 P
Dec. 8 PB 1 ###
Balance ###
ACCOUNT Accrued Interest Receivable ACCOUNT NO.

2011
Dec. 31 Balance P 38,853.00
Balance 38,853.00
ACCOUNT Prepaid Advertising ACCOUNT NO.

2011 2011
Nov. 30 Balance P 600,000.00 Dec. 31 GJ 12
Balance 50,000.00
ACCOUNT Prepaid Insurance ACCOUNT NO.

2011 2011
Nov. 30 Balance P 600,000.00 Dec. 31 GJ 12
Balance 50,000.00
ACCOUNT Unused Supplies ACCOUNT NO.

2011
Nov. 30 Balance P 300,000.00
ACCOUNT Input Tax ACCOUNT NO.

2011
Dec. 31 PJ 12 546,422.00
Balance ###
ACCOUNT Land ACCOUNT NO.

2011
ACCOUNT Building ACCOUNT NO.

2011
ACCOUNT Accumulated Depreciation - Building ACCOUNT NO.

2011
Dec. 31 GJ 14 P
ACCOUNT Furniture and Fixture ACCOUNT NO.

2011
ACCOUNT Accumulated Depreciation - Furniture and Fixture ACCOUNT NO.

2011
Dec. 31 GJ 14 P
Balance
ACCOUNT Transportation Equipment ACCOUNT NO.

2011
ACCOUNT Accumulated Depreciation - Transportation Equipment ACCOUNT NO.

2011
Dec. 31 GJ 12 P
ACCOUNT Office Equipment ACCOUNT NO.

2011
ACCOUNT Accumulated Depreciation - Office Equipment ACCOUNT NO.

2011
Dec. 31 GJ 12 P
ACCOUNT Organization Cost ACCOUNT NO.

2011 2011
Nov. 30 Balance P ### Dec. 31 GJ 12 P
Balance 800,000.00
C1.3
101
CREDIT
###
102
CREDIT
8,300.00
103
CREDIT
104
CREDIT
###
###
###
###
104-A
CREDIT
###
105
CREDIT
106
CREDIT
###
107
CREDIT
108
CREDIT
###
109
CREDIT
###
110
CREDIT
111
CREDIT
201
CREDIT
202
CREDIT
202-A
CREDIT
###
203
CREDIT
203-A
CREDIT
###
###
204
CREDIT
204-A
CREDIT
###
205
CREDIT
205-A
CREDIT
###
301
CREDIT
###
C2!L61=PAJE!M23-PAJE!O30+PAJE!M33+PAJE!M97+PAJE!M106
Decem
PROO
Audit Objectives
1. To determine the whether all cash in bank exist at year -end.
2. To determine whether all cash transactions are recorded in the proper accounting
Assertions Affected
1. Existence
2. Completeness
Audit Procedures
1. Obtain a Bank Reconciliation from client.
2. Examine the Bank Reconciliations and review reconciling items.
3. Obtain Bank Statement of all the accounts of the client.
4. Test significant transactions by their appropriate supporting documents.
5. Prepare Proof of Cash.
6. Note and investigate further exceptions noted.
7. Propose necessary adjustments.
Findings
A proof of cash was constructed for November and December 2011 since no B
Grace Corporat
Proof of Cash
For the Month of Decemb
Bank Reconciliation
November 30, 2011
Balance per bank statem C2.2 ### C2.2
Add: Undeposited Receipts on December C1.1
Deposits in Transit
November C2.1 170,500.00 C2.1
December C2.2
Outstanding checks
November C2.1 (566,500.00)
December
Adjusted Balance ### f
Balance per book C1.3 ### C1.3

Unrecorded Collection C1.1
NSF Check #4825
Redeposit of PCIB Check #4825 C2.3
Collection of Notes Receivable C2.3
Proceeds of Promissory Note C2.3
Bank Service Charges
Adjusted Balance ### f
Based on the proof of cash provided, the following adjusting entries are propo
Description
PAJE 1 Cash in Bank
Accounts Receivable - Louie Tan
Accounts Receivable - Benitez Merchandising
Accounts Receivable - Susan de Leon
To record undeposited receipts on December.
Note: The PAJE for cash sales of Eagle Contractors and Dynasty Corporation is
PAJE 2Accounts Receivable

Cash in Bank
To record NSF Check #4825.
PAJE 3Cash in Bank
Accounts Receivable
To record redeposit of PCIB Check #4825.
PAJE 4Cash in Bank
Interest Expense
Notes Receivable
To record collection of notes receivable.
PAJE 5Cash in Bank
Discount on Notes Payable
Notes Payable
To record proceeds of promissory note.
PAJE 6Miscellaneous Expense
Cash in Bank
To record bank service charges.
Legend
C1.1 Traced from Official Cash Receipts
C1.3Traced from General Ledger - Asset
C2.1 Traced from November Bank Reconciliation
C2.2 Traced from the Bank Statement
C2.3 Traced from Credit/Debit Memo
C2.4 Traced from Cash Vouchers
a Unadjusted balance of Receipts on Bank are cross referenced Cash Receipts
b Unadjsted balance of Disbursements are cross -referenced with Cash Disbur
c Includes: #118 - ₱484,000, #119 - ₱165,550, #120 - ₱186,250, #121 - ₱93,7
d Includes checks: #12349 - ₱175,000, #12352 - ₱14,000, #12361 - ₱25,490, #12362 - ₱13,325, #12
e This amount was wrongly stated as P 4,709,203 in the ending balance of Cas
f Footed
Conclusions
During the conduct of the said audit procedure, the audit team discovered that the cl
December 31, 2011. Based on the Proof of Cash, the client failed to record some tran
To determine whether or not cash exists and recorded in the proper accounting perio
Official cash receipts, GL, November Bank Reconciliation, December Bank Statement,
proposed adjusting entries, there were no further exceptions found.
December 31,2011
PROOF OF CASH C2
the proper accounting period.
documents.
ember 2011 since no Bank Reconciliation was available for December 31, 2011.
Grace Corporation
Proof of Cash
the Month of December 31, 2011
December Bank Reconciliation

Receipts Disbursements December 31, 2011
### a C2.2 ### b C2.2 ###
PHP 1,134,025.00 c C1.1 1,134,025.00 c
(170,500.00)
85,113.00 C2.2 85,113.00
C2.1 (566,500.00)
C2.4 1,255,655.00 d C2.4 (1,255,655.00) d
### f ### f ### f
### C1.3 ### C1.3 ### e

1,134,025.00 C1.1 1,134,025.00
C2.3 500,000.00 C2.3 (500,000.00)
500,000.00 C2.3 500,000.00
490,000.00 C2.3 490,000.00
7,900,000.00 C2.3 7,900,000.00
C2.3 2,500.00 C2.3 (2,500.00)
### f ### f ### f
sting entries are proposed (PAJE):

Debit Credit
782,225.00
484,000.00
tez Merchandising 93,750.00
n de Leon 204,475.00
ipts on December.
Dynasty Corporation is reflected in procedure F7 PAJE 1 and PAJE3 with their corresponding output tax
500,000.00
500,000.00
500,000.00
500,000.00
of PCIB Check #4825.
490,000.00
10,000.00
500,000.00
of notes receivable.
7,900,000.00
2,100,000.00
10,000,000.00
of promissory note.
2,500.00
2,500.00
ce charges.
erenced Cash Receipts Journal with Deposit Slips.
enced with Cash Disbursements Journal, Cash Vouchers and Invoices.
₱186,250, #121 - ₱93,750, OR#122 - ₱204,475
5,490, #12362 - ₱13,325, #12363 - ₱85000, #12364 - ₱942,840
e ending balance of Cash in Bank Ledger instead of P 4,709,230
m discovered that the client failed to construct a bank reconciliation for the month of
ed to record some transactions thus the auditors proposed the given adjusting entries.
roper accounting period, the audit team vouched and cross referenced the following:
ember Bank Statement, Credit/Debit Memos and Cash Vouchers. Other than the
ound.
Prepared by: Date:

RAC 1/8/2012
MMA 1/8/2012
Reviewed by: Date:

SSM 1/10/2012
ponding output tax.
NOVEMBER BANK RECONCILIATION
November 30, 2011
Balance per Bank P 1,396,000.00
Add Undeposited Collection
Less Outstanding Checks
Date Check # Amount
11/28/2011 12340 P 100,000.00
11/29/2011 12342 123,500.00
11/25/2011 12344 143,000.00
Balance per Ledger
NCILIATION C2.1
November 30, 2011 Legend
P 1,396,000.00
170,500.00
Nov. 30 2011 Bank

566,500.00 a Reconciliation
P 1,000,000.00
BANK STATEMENT
PCI Bank
ACCOUNT NO.:
4486-9156-80
NAME AND ADDRESS:
GRACE CORPORATION
12 Ninoy Aquino Avenue, Parañaque City
DATE CHECKS
NO. AMOUNT
2011
Dec. 1
12340 P 100,000.00
12342 123,500.00
2 12338 200,000.00
6 12344 143,000.00
6 12345 300,000.00
9
10 12348 87,500.00
500,000.00 RT
13 12347 34,200.00
12350 114,900.00
12346 972,750.00
13
16 12351 1,554,500.00
17 12353 1,080,000.00
23
23 12355 13,250.00
23
23 12356 83,300.00
12354 625,000.00
28 12357 5,000.00
12359 125,315.00
29 12358 32,500.00
12360 25,000.00
2,500.00 SC
6,122,215.00
2005
Jan. 5 12387 34,200.00
12349 175,000.00
6 12352 14,000.00
12365 85,000.00
12366 249,750.00
7 12362 13,325.00
12363 85,000.00
12367 97,000.00
12360 70,000.00
MENT C2.2
STATEMENT OF ACCOUNT
NO. OF CHECKS PAGE NO.:

18 1/1
DEPOSITS BALANCE
P 1,396,000.00
P 170,500.00 1,466,500.00
1,343,000.00
1,263,300.00 2,406,300.00
2,263,300.00
362,600.00 2,325,900.00
990,000.00 3,315,900.00
3,228,400.00
769,888.00 3,498,288.00
500,000.00 CM 3,964,088.00
3,849,188.00
2,876,438.00
2,876,438.00
1,255,000.00 2,576,938.00
1,496,938.00
1,495,374.00 2,992,312.00
2,992,312.00
2,979,062.00
980,000.00 3,959,062.00
191,825.00 4,067,587.00
3,442,587.00
7,900,000.00 CM 11,337,587.00
2,625,000.00 13,837,272.00
13,804,772.00
13,779,772.00
490,000.00 CM 14,267,272.00
18,993,487.00
85,113.00 a Deposit in Transit for December

929,550.00
204,475.00
29,725.00
CREDIT AND DEBIT
MEMOS
PCI Bank
NAME AND ADDRESS:
GRACE CORPORATION
12 Ninoy Aquino Avenue, Paranaque City
We have debited your Current Account

No. 4486-9156-80 for service charges
for December.
DEBIT MEMO O.:
PCI Bank
NAME AND ADDRESS:
GRACE CORPORATION
We have debited your Current Account No. 4486-9156-80

for return of PCIB check #4825 for P 500,000.00
drawn against insufficient funds
DEBIT MEMO O.:
PCI Bank
NAME AND ADDRESS:
GRACE CORPORATION
We have credited your Current Account

No. 4486-9156-80 for collection of notes
receivable P 500,000.00 proceeds.
CREDIT MEMO O.:
PCI Bank
NAME AND ADDRESS:
GRACE CORPORATION

No. 4486-9156-80 for redeposit of PCIB
check #4825 for P 500,000.00
CREDIT MEMO O.:

PCI Bank
NAME AND ADDRESS:
GRACE CORPORATION

No. 4486-9156-80 proceeds of P 10,000,000.00 a
promissory note discounted at 12%
CREDIT MEMO O.:
a Loan Payable collaterized by Land (refer to K4)

C2.3
DATE:
December 29, 2011
P 2,500.00
CA 4486-9156-80
DATE:
December 10, 2011
No. 4486-9156-80
500,000.00
P 500,000.00
CA 4486-9156-80
DATE:
December 29, 2011
P 490,000.00
CA 4486-9156-80
DATE:
December 13, 2011
P 500,000.00
CA 4486-9156-80
DATE:
December 28, 2011
P 7,900,000.00
CA 4486-9156-80
CASH VOUCHERS
ACCOUNT NO. 4486-9156-80 ACCOUNT NAME GRACE CORPORATION
DATE
PAY TO THE
ORDER OF GENIUS PAPER PRODUCTS P
PESOS Three hundred thousand pesos only
PCI Bank __________________________ _______________
SUCAT ROAD BRANCH
Gra CORPORATION
CASH VOUCHER
ce
VAT 2011-002-148 | TIN 4004-009-175 Telefax: 632 843 7690 | Website: www.grac
Payee: Date:
GENIUS PAPER PRODUCTS
Amount
in words:
Three hundred thousand pesos only
For
Downpayment fot merchandise purchased per

Invoice No. 111 P
Date of Check: Check No.:
December 2, 2011
Prepared by: Checked By: Approved by: Received above amount P
by :
Date :
DATE
PAY TO THE
ORDER OF SAPPHIRE CORPORATION P
PESOS Nine hundred seventy two thousand seven hundred fifty pesos on
PCI Bank __________________________ _______________
SUCAT ROAD BRANCH
Gra CORPORATION
CASH VOUCHER
ce
Payee: Date:
SAPPHIRE CORPORATION
Amount
in words:
Nine hundred seventy two thousand seven hundred fifty pesos on
For
Partial payment for Invoice No. 920 P

December 5, 2011
by :
Date :
DATE
PAY TO THE
ORDER OF BUREAU OF INTERNAL REVENUE P
PESOS Thirty four thousand two hundred pesos only
PCI Bank __________________________ _______________
SUCAT ROAD BRANCH
Gra CORPORATION
CASH VOUCHER
ce
Payee: Date:
BUREAU OF INTERNAL REVENUE
Amount
in words:
Thirty four thousand two hundred pesos only
For
Remittance of Novenber 2011 taxes withheld on wages P

December 7, 2011
by :
Date :
DATE
PAY TO THE
ORDER OF SOCIAL SECURITY SYSTEM P
PESOS Eighty seven thousand five hundred pesos only
PCI Bank __________________________ _______________
SUCAT ROAD BRANCH
Gra CASH VOUCHER
ce
Gra CORPORATION
ce
Payee: Date:
SOCIAL SECURITY SYSTEM
Amount
in words:
Eighty seven thousand five hundred pesos only
For
Remittance of Medicare, SSS & ECC,

Employer's and Employee's contribution P

December 9, 2011
by :
Date :
DATE
PAY TO THE
ORDER OF ARBOLEDA CO., INC. P
PESOS One hundred seventy five thousand pesos only
PCI Bank __________________________ _______________
SUCAT ROAD BRANCH

Gra CORPORATION
CASH VOUCHER
ce
Payee: Date:
ARBOLEDA CO., INC.
Amount
in words:
One hundred seventy five thousand pesos only
For
Partial paymenr for invoce No. 101 P

December 10, 2011
by :
Date :
DATE
PAY TO THE
PESOS One hundred fourteen thousand nine hundred pesos only

PCI Bank __________________________ _______________
SUCAT ROAD BRANCH
Gra CORPORATION
CASH VOUCHER
ce
Payee: Date:
SAPPHIRE CORPORATION
Amount
in words:
One hundred fourteen thousand nine hundred pesos only
For
Partial paymenr for invoce No. 1082 P

December 10, 2011
by :
Date :
DATE
PAY TO THE
ORDER OF ARBOLEDA CO., INC P
PESOS One million five hundred fifty four thousand five hundred pesos o
PCI Bank __________________________ _______________
SUCAT ROAD BRANCH
Gra CORPORATION
CASH VOUCHER
ce
Payee: Date:
ARBOLEDA CO., INC
Amount
in words:
One million five hundred fifty four thousand five hundred pesos on
For
Full payment of account with Arboleda Co., Inc.

per Invoice no. 90 P

December 10, 2011
by :
Date :

DATE
PAY TO THE
ORDER OF CALTEX GAS P
PESOS Fourteen thousand pesos only
PCI Bank __________________________ _______________
SUCAT ROAD BRANCH
Gra CORPORATION
CASH VOUCHER
ce
Payee: Date:
CALTEX GAS
Amount
in words:
Fourteen thousand pesos only
For
560 liters gasoline P

December 12, 2011
by :
Date :
DATE
PAY TO THE
ORDER OF PAYMASTER P
PESOS One million eighty thousand pesos only
PCI Bank __________________________ _______________
SUCAT ROAD BRANCH
Gra CORPORATION
CASH VOUCHER
ce
Payee: Date:
CALTEX GAS PAYMASTER
Amount
in words:
One million eighty thousand pesos only
For
Salaries for December 1- 15, 2011

Total 1,238,760.00
Less: SSS, Medicare & ECC (72,360.00)
HDMF (21,600.00)
Withholding taxes (64,800.00) P

December 14, 2011
by :
Date :
DATE
PAY TO THE
PESOS Six hundred twenty five thousand pesos only
PCI Bank __________________________ _______________
SUCAT ROAD BRANCH
Gra CORPORATION
CASH VOUCHER
ce
Payee: Date:
Amount
in words:
Six hundred twenty five thousand pesos only
For
Partial payment per Invoice No. 130 P

December 15, 2011
by :
Date :
DATE
PAY TO THE
ORDER OF MERALCO P
PESOS Thirteen thousand two hundred fifty pesos only
PCI Bank __________________________ _______________
SUCAT ROAD BRANCH
Gra CORPORATION
CASH VOUCHER
ce
Payee: Date:
MERALCO
Amount
in words:
Thirteen thousand two hundred fifty pesos only
For
Additional electric bill for November 2011 P

December 15, 2011
by :
Date :
DATE
PAY TO THE
PESOS Eighty three thousand three hundred pesos only
PCI Bank __________________________ _______________
SUCAT ROAD BRANCH
Gra CORPORATION
CASH VOUCHER
ce
Payee: Date:
ARBOLEDA CO., INC.
Amount
in words:
Eighty three thousand three hundred pesos only
For
Full payment of Invoice No. 117
Invoice Price P 85,000.00
Less: Discount 1,700.00
Balance P 83,300.00 P

December 20, 2011
by :
Date :
DATE
PAY TO THE
ORDER OF ARCHER SUPPLIES P
PESOS Five thousand pesos only
PCI Bank __________________________ _______________
SUCAT ROAD BRANCH
Gra CORPORATION
CASH VOUCHER
ce
Gra
ce
Payee:
ARCHER SUPPLIES
Date:
Amount
in words:
Five thousand pesos only
For
500 pieces plastic bags for store supplies P

December 21, 2011
by :
Date :
DATE
PAY TO THE
PESOS Thirty two thousand five hundred pesos only
PCI Bank __________________________ _______________
SUCAT ROAD BRANCH
Gra
ce
Gra CORPORATION
CASH VOUCHER
ce
Payee: Date:
Amount
in words:
Thirty two thousand five hundred pesos only
For
Partial payment of invoice no. 145

Invoice price 130,000.00
25% payment 32,500.00
Balance 97,500.00 P

December 26, 2011
by :
Date :
DATE
PAY TO THE
PESOS One hundred twenty five thousand three hundred fifteen pesos o
PCI Bank __________________________ _______________

PCI Bank
SUCAT ROAD BRANCH
Gra CORPORATION
CASH VOUCHER
ce
Payee: Date:
Amount
in words:
One hundred twenty five thousand three hundred fifteen pesos on
For
Partial payment of invoice no. 140

Discount 2,560.00
Balance 125,315.00 P

December 26, 2011
by :
Date :
DATE
PAY TO THE
PESOS Twenty five thousand pesos only
PCI Bank __________________________ _______________
SUCAT ROAD BRANCH
Gra CORPORATION
CASH VOUCHER
ce
Payee: Date:
Amount
in words:
Twenty five thousand pesos only
For
Full payment of asccount with Arboleda Co., Inc

per Invoice No. 90 P

December 26, 2011
by :
Date :
DATE
PAY TO THE
PESOS Twenty five thousand four hundred ninety pesos only
PCI Bank __________________________ _______________
SUCAT ROAD BRANCH
Gra CORPORATION
CASH VOUCHER
ce
Payee: Date:
ARBOLEDA CO., INC.
Amount
in words:
Twenty five thousand four hundred ninety pesos only
For
Full payment of Invoice No. 127

Discount 260.00
Balance 25,490.00 P

December 26, 2011
by :
Date :
DATE
PAY TO THE
ORDER OF XYZ ADS P
PESOS Thirteen thousand three hundred twenty five pesos only
PCI Bank __________________________ _______________
SUCAT ROAD BRANCH
Gra CORPORATION
CASH VOUCHER
ce
Payee: Date:
XYZ ADS
Amount
in words:
Thirteen thousand three hundred twenty five pesos only
For
100 pieces brochures P

December 27, 2011
by :
Date :
DATE
PAY TO THE
PESOS Eighty five thousand pesos only
PCI Bank __________________________ _______________
SUCAT ROAD BRANCH
Gra CORPORATION
CASH VOUCHER
ce
Payee: Date:
XYZ ADS
Amount
in words:
Eighty five thousand pesos only
For
In payment for Invoice No. 1095 P

December 28, 2011
by :
Date :
DATE
PAY TO THE
ORDER OF PAYMASTER P
PESOS Nine hundred forty two thousand eight hundred forty pesos only
PCI Bank __________________________ _______________
SUCAT ROAD BRANCH
Gra CORPORATION
CASH VOUCHER
ce
Payee: Date:
PAYMASTER
Amount
in words:
Nine hundred forty two thousand eight hundred forty pesos only
For
Payroll for December 16-31 1,101,600.00

Less: SSS, Medicare & ECC (72,360.00)
Withholding Taxes (64,800.00)
HDMF (21,600.00) P

December 30, 2011
by :
Date :
DATE
PAY TO THE
ORDER OF MERALCO P
PESOS Eighty five thousand pesos only
PCI Bank __________________________ _______________
SUCAT ROAD BRANCH
Gra CORPORATION
CASH VOUCHER
ce
Payee: Date:
MERALCO
Amount
in words:
Eighty five thousand pesos only
For
Meralco bill for the period December 1-31 2011 P

January 3, 2012
by :
Date :
DATE
PAY TO THE
PESOS Two hundred forty nine thousand seven hundred fifty pesos only
PCI Bank __________________________ _______________
SUCAT ROAD BRANCH
Gra CORPORATION
CASH VOUCHER
ce
Gra
ce
Payee:
Date:
Amount
in words:
Two hundred forty nine thousand seven hundred fifty pesos only
For
In payment of purchases P

January 3, 2012
by :
Date :
DATE
PAY TO THE
ORDER OF PCI BANKARD, INC. P
PESOS Ninety seven thousand pesos only
PCI Bank __________________________ _______________
SUCAT ROAD BRANCH
Gra
ce
Gra CORPORATION
CASH VOUCHER
ce
Payee: Date:
PCI BANKARD, INC.
Amount
in words:
Ninety seven thousand pesos only
For
Representation expenses of the president P

incurred in December 2011

January 3, 2012
by :
Date :
DATE
PAY TO THE
ORDER OF MUNICIPALITY OF MANILA P
PESOS Seventy thousand pesos only
PCI Bank __________________________ _______________

SUCAT ROAD BRANCH
Gra CORPORATION
CASH VOUCHER
ce
Payee: Date:
MUNICIPALITY OF MANILA
Amount
in words:
Seventy thousand pesos only
For
Property taxes for 2011 P

January 4, 2012
by :
Date :
DATE
PAY TO THE
ORDER OF PHILIPPINE LONG DISTANCE COMPANY P
PESOS Fifteen thousand pesos only
PCI Bank __________________________ _______________
SUCAT ROAD BRANCH
Gra CORPORATION
CASH VOUCHER
ce
Payee: Date:
PHILIPPINE LONG DISTANCE COMPANY
Amount
in words:
Fifteen thousand pesos only
For
Telephone bill for December 2011 P

January 4, 2012
by :
Date :
DATE
PAY TO THE
ORDER OF MWSS P
PESOS Forty eight thousand five hundred pesos only
PCI Bank __________________________ _______________
SUCAT ROAD BRANCH
Grac CORPORATION
CASH VOUCHER
e
Payee: Date:
MWSS
Amount
in words:
Forty eight thousand five hundred pesos only
For
Water bill for December 2011 P

January 4, 2012
by :
Date :
DATE
PAY TO THE
ORDER OF ARBOLEDA CO., INC P
PESOS One hundred forty three thousand four hundred fifty pesos only
PCI Bank __________________________ _______________
SUCAT ROAD BRANCH
Gra CORPORATION
CASH VOUCHER
ce
Payee: Date:
ARBOLEDA CO., INC
Amount
in words:
One hundred forty three thousand four hundred fifty pesos only
For
In payment of purchases P

January 4, 2012
by :
Date :
C2.4
CHECK NO. 12345
December 2, 2011
300,000.00
__________________________
CASH VOUCHER No. 300

oy Aquino Avenue, Paranaque City | Tel: 632 843 7689
632 843 7690 | Website: www.gracecorporation.biz.ph
December 2, 2011
pesos only
300,000.00
12345
CHECK NO. 12346
December 5, 2011
972,750.00
n hundred fifty pesos only
__________________________

December 5, 2011
n hundred fifty pesos only

972,750.00
12346
CHECK NO. 12347
December 7, 2011
34,200.00
__________________________

December 7, 2011
red pesos only
34,200.00
12347
CHECK NO. 12348
December 9, 2011
87,500.00
__________________________

December 9, 2011
dred pesos only
87,500.00
12348
CHECK NO. 12349
December 10, 2011
175,000.00
__________________________
December 10, 2011
sand pesos only
175,000.00
12349
CHECK NO. 12350
December 10, 2011
114,900.00
dred pesos only

__________________________

December 10, 2011
e hundred pesos only
114,900.00
12350
CHECK NO. 12351
December 10, 2011
1,554,500.00
nd five hundred pesos only
__________________________

December 10, 2011
d five hundred pesos only
1,554,500.00
12351
CHECK NO. 12352

December 12, 2011
14,000.00
__________________________

December 12, 2011
os only
14,000.00
12352
CHECK NO. 12353
December 14, 2011
1,080,000.00
__________________________

December 14, 2011
d pesos only
1,080,000.00
12353
CHECK NO. 12354
December 15, 2011
625,000.00
__________________________

December 15, 2011
and pesos only
625,000.00
12354
CHECK NO. 12355
December 15, 2011
13,250.00
__________________________

December 15, 2011
fifty pesos only
13,250.00
12355
CHECK NO. 12356
December 20, 2011
83,300.00
__________________________

December 20, 2011
ndred pesos only

83,300.00
12356
CHECK NO. 12357
December 21, 2011
5,000.00
__________________________

December 21, 2011
only
5,000.00
12357
CHECK NO. 12358
December 26, 2011
32,500.00
__________________________
December 26, 2011
red pesos only
32,500.00
12358
CHECK NO. 12359
December 26, 2011
125,315.00
undred fifteen pesos only
__________________________
December 26, 2011
hundred fifteen pesos only
125,315.00
12359
CHECK NO. 12360
December 26, 2011
25,000.00
__________________________

December 26, 2011
sos only
25,000.00
12360
CHECK NO. 12361
December 26, 2011

25,490.00
pesos only
__________________________

December 26, 2011
d ninety pesos only
25,490.00
12361
CHECK NO. 12362
December 27, 2011
13,325.00
five pesos only
__________________________

December 27, 2011
enty five pesos only
13,325.00
12362
CHECK NO. 12363
December 28, 2011
85,000.00
__________________________

December 28, 2011
sos only
85,000.00
12363
CHECK NO. 12364
December 30, 2011
942,840.00
ndred forty pesos only
__________________________

December 28, 2011
hundred forty pesos only

942,840.00
12364
CHECK NO. 12365
January 3, 2012
85,000.00
__________________________

January 3, 2012
sos only
85,000.00
12365
CHECK NO. 12366
January 3, 2012
249,750.00
undred fifty pesos only
__________________________

January 3, 2012
hundred fifty pesos only
249,750.00
12366
CHECK NO. 12367
January 3, 2012
97,000.00
__________________________
December 26, 2011
esos only
97,000.00
12367
CHECK NO. 12368
January 4, 2012
70,000.00
__________________________
January 4, 2012
os only
70,000.00
12368
CHECK NO. 12369
January 4, 2012
15,000.00
__________________________

January 4, 2012
s only
15,000.00
12369
CHECK NO. 12370
January 4, 2012
48,500.00
__________________________

January 4, 2012
red pesos only
48,500.00
12370
CHECK NO. 12371
January 4, 2012
143,450.00
ndred fifty pesos only
__________________________

January 4, 2012
hundred fifty pesos only
143,450.00
12371
DEPOSIT SLIPS
CURRENT ACCOUNT DEPOSIT SLIP
PCI Bank For Cash Deposits and Regular Clearing
only (On-Us and Other Bank's Checks)
PCI Bank
ACCOUNT
NUMBER 4 4 8 6 9 1 5 6 8 0 ACCOUNT
NUMBER 4
ACCOUNT DATE ACCOUNT
NUMBER 28 December 2011 NUMBER
GRACE CORPORATION GRACE C

TELLER'S VALIDATION: TELLER'S VALIDATION:
THIS SERVES YOUR RECEIPT WHEN VALIDATED THIS SERVES YOU

THIS DEPOSIT IS SUBJECT TO THE TERMS AND CONDITION COVERING THE ACCOUNT THIS DEPOSIT IS SUBJECT TO THE TE
PLEASE ENDORSE AND LIST EACH CHECK PROPERLY NO. OF PIECES
LOCAL CLEARING CHECKS
NAME OF BANK / BRANCH CHECK NO. AMOUNT

RCBC 481216 P ###
CASH DEPOSIT
PCI BANK CHECKS AND LOCAL CL
TOTAL OTHER BANKS' CHECKS P 2,625,000.00 PLEASE ENDORSE AN
REGIONAL & INTERNATIONAL CLEARING CHECKS - PMO's / RPTW's DRAFT/CASHIER'S CHECK
REGIONAL CLEARING
TOTAL AND RPTW's AND PMO's P CHECK DEPOSIT
TOTAL DEPOSIT P 2,625,000.00 TOTAL DEPOSIT

PCI Bank
ACCOUNT
NUMBER 4 4 8 6 9 1 5 6 8 0 ACCOUNT
NUMBER 4

THIS IS YOUR RECEIPT WHEN VALIDATED THIS IS YOUR RE

RECEIVED BY: THIS DEPOSIT IS SUBJECT TO THE TERMS RECEIVED BY: THIS DEPOSIT IS SUBJECT TO TH
AND CONDITIONS COVERING THE ACCOUNT
MACHINE PRINT…………………………………………………………………….…………………………………….…… MACHINE PRINT………………
PCI 12.28.04 P 2,625,000.00 PCI
DATE TELLER NUMBER RECEIPT NUMBER PHILIPPINE CURRENCY DATE
TELLER TELLER
e B71

PCI Bank
ACCOUNT
NUMBER 4 4 8 6 9 1 5 6 8 0 ACCOUNT
NUMBER 4



PCIB 481265 P 980,000.00
CASH DEPOSIT
TOTAL OTHER BANKS' CHECKS P 980,000.00 PLEASE ENDORSE AN
REGIONAL & INTERNATIONAL CLEARING CHECKS - PMO's / RPTW's CHECK / DRAFT

PNB
REGIONAL CLEARING
TOTAL AND RPTW's AND PMO's P - CHECK DEPOSIT
TOTAL DEPOSIT P 980,000.00 TOTAL DEPOSIT

PCI Bank
ACCOUNT
NUMBER 4 4 8 6 9 1 5 6 8 0 ACCOUNT
NUMBER 4


PCI 12.23.04 P 980,000.00 PCI
TELLER TELLER
ge B72

PCI Bank
ACCOUNT
NUMBER 4 4 8 6 9 1 5 6 8 0 ACCOUNT
NUMBER 4



BPI 249169 P 845,000.00
RCBC 876521 410,000.00
CASH DEPOSIT
TOTAL OTHER BANKS' CHECKS P 1,255,000.00 PLEASE ENDORSE AN
REGIONAL & INTERNATIONAL CLEARING CHECKS - PMO's / RPTW's CHECK / DRAFT

RCBC
PCIB
REGIONAL CLEARING
TOTAL AND RPTW's AND PMO's P - CHECK DEPOSIT
TOTAL DEPOSIT P ### TOTAL DEPOSIT

PCI Bank
ACCOUNT
NUMBER 4 4 8 6 9 1 5 6 8 0 ACCOUNT
NUMBER 4


PCI 12.16.04 P 1,255,000.00 PCI
TELLER TELLER
ge B73

PCI Bank
ACCOUNT
NUMBER 4 4 8 6 9 1 5 6 8 0 ACCOUNT
NUMBER 4


PLEASE ENDORSE AND LIST EACH CHECK PROPERLY PLEASE ENDORSE AN
LOCAL CLEARING CHECKS LOCAL CL

NAME OF BANK / BRANCH CHECK NO. AMOUNT NAME OF BANK / BRANCH
PCIB 4825 P 500,000.00 BPI
CBC 123498 490,000.00 RCBC
PCI BANK CHECKS AND

TOTAL OTHER BANKS' CHECKS P 990,000.00 TOTAL
REGIONAL & INTERNATIONAL CLEARING CHECKS - PMO's / RPTW's REGIONAL & INTERNATIONAL
REGIONAL CLEARING
TOTAL AND RPTW's AND PMO's P - TOTAL

PCI Bank
ACCOUNT
NUMBER 4 4 8 6 9 1 5 6 8 0 ACCOUNT
NUMBER 4


PCI 12.09.04 P 990,000.00 PCI
TELLER TELLER
ge B74
PCI Bank
ACCOUNT
NUMBER 4 4 8 6 9 1 5 6 8 0 ACCOUNT
NUMBER 4


PLEASE ENDORSE AND LIST EACH CHECK PROPERLY PLEASE ENDORSE AN
LOCAL CLEARING CHECKS LOCAL CL

NAME OF BANK / BRANCH CHECK NO. AMOUNT NAME OF BANK / BRANCH
SBTC 928421 P 362,600.00 PNB
RCBC
PCI BANK CHECKS AND

TOTAL OTHER BANKS' CHECKS P 362,600.00 TOTAL
REGIONAL & INTERNATIONAL CLEARING CHECKS - PMO's / RPTW's REGIONAL & INTERNATIONAL
REGIONAL CLEARING
TOTAL AND RPTW's AND PMO's P - TOTAL

PCI Bank
ACCOUNT
NUMBER 4 4 8 6 9 1 5 6 8 0 ACCOUNT
NUMBER 4

PCI 12.06.04 P 362,600.00 PCI
TELLER TELLER
ge B75
END OF DEPOSIT SLIPS

PS C2.5
For Cash Deposits and Regular Clearing
4 8 6 9 1 5 6 8 0
DATE
5 January 2012
GRACE CORPORATION
R'S VALIDATION:
THIS SERVES YOUR RECEIPT WHEN VALIDATED

THIS DEPOSIT IS SUBJECT TO THE TERMS AND CONDITION COVERING THE ACCOUNT
O. OF PIECES DENOMINATION AMOUNT
P 1,000.00 P
500.00
200.00
100.00
50.00
20.00
CASH DEPOSIT P 85,113.00
PLEASE ENDORSE AND LIST EACH CHECK PROPERLY
/CASHIER'S CHECK DENOMINATION AMOUNT
CHECK DEPOSIT P
AL DEPOSIT P 85,113.00

4 8 6 9 1 5 6 8 0
DATE
5 January 2012
GRACE CORPORATION
R'S VALIDATION:
THIS IS YOUR RECEIPT WHEN VALIDATED

THIS DEPOSIT IS SUBJECT TO THE TERMS
MACHINE PRINT…………………………………………………………………….………………………………
01.05.05 P 85,113.00
DATE TELLER NUMBER RECEIPT NUMBER PHILIPPINE CURRENCY
Page B

4 8 6 9 1 5 6 8 0
DATE
23 December 2011
GRACE CORPORATION
R'S VALIDATION:

P 1,000.00 P
500.00
200.00
100.00
50.00
20.00
HECK / DRAFT DENOMINATION AMOUNT

NB 510152 P 187,200.00
CHECK DEPOSIT P 187,200.00

4 8 6 9 1 5 6 8 0
DATE
23 December 2011
GRACE CORPORATION
R'S VALIDATION:

MACHINE PRINT…………………………………………………………………….………………………………
12.23.04 P 191,825.00
Page B

4 8 6 9 1 5 6 8 0
DATE
23 December 2011
GRACE CORPORATION
R'S VALIDATION:

P 1,000.00 P
500.00
200.00
100.00
50.00
20.00
HECK / DRAFT DENOMINATION AMOUNT

BC 369125 P 681,000.00
IB 246810 757,500.00
CHECK DEPOSIT P 1,438,500.00

AL DEPOSIT P ###

4 8 6 9 1 5 6 8 0
DATE
23 December 2011
GRACE CORPORATION
R'S VALIDATION:

MACHINE PRINT…………………………………………………………………….………………………………
12.23.04 P 1,495,374.00
Page B

4 8 6 9 1 5 6 8 0
DATE
13 December 2011
GRACE CORPORATION
R'S VALIDATION:


OF BANK / BRANCH CHECK NO. AMOUNT
I 249169 P 528,000.00
BC 728465 241,888.00
PCI BANK CHECKS AND

OTHER BANKS' CHECKS P 769,888.00
REGIONAL & INTERNATIONAL CLEARING CHECKS - PMO's / RPTW's
REGIONAL CLEARING
AND RPTW's AND PMO's P -

4 8 6 9 1 5 6 8 0
DATE
13 December 2011
GRACE CORPORATION
R'S VALIDATION:

MACHINE PRINT…………………………………………………………………….………………………………
12.13.04 P 769,888.00
Page B
4 8 6 9 1 5 6 8 0
DATE
2 December 2011
GRACE CORPORATION
R'S VALIDATION:


OF BANK / BRANCH CHECK NO. AMOUNT
B 481853 P 224,500.00
BC 329864 ###
PCI BANK CHECKS AND

OTHER BANKS' CHECKS P 1,263,300.00
REGIONAL & INTERNATIONAL CLEARING CHECKS - PMO's / RPTW's
REGIONAL CLEARING
AND RPTW's AND PMO's P -
AL DEPOSIT P ###

4 8 6 9 1 5 6 8 0
DATE
2 December 2011
GRACE CORPORATION
R'S VALIDATION:
MACHINE PRINT…………………………………………………………………….………………………………
12.02.04 P 1,263,300.00
Page B
T SLIPS
Dece
BANK
Audit Objectives
1. To determine whether cash in bank exists at year-end and cash-related transaction
2. To determine that all cash balances of the client are reflected on the balance shee
3. To determine that cash balances are available for use without restrictions or if with
4. To determine that cash balances of the client are reflected on the balance sheet at
5. To confirm the relationship with the bank including contingencies, liens, pledges, re
Assertions Affected
1. Existence
2. Rights and Obligations
Audit Procedures
1. Obtain a complete list of bank accounts, including accounts closed during the perio
2. Identifying Bank Accounts for Confirmations.
3. Prepare Bank Confirmation Form.
4. Send Bank Confirmation letters to banks. Send another letter if bank did not respon
5. Obtain bank reply to Confirmation letter. Compare balances per reply against balan
6. Note and investigate further the differences noted.
7. Examine the reply for notations if cash in bank is being restricted.
8. Understand the restriction and assess the proper presentation of cash in bank as a
Findings
Confirmation Control Schedule

First time sending
Account NumberBank Account
Bank
in TB Number (date/initials)
PCI Bank 4486-9156-80 775 12/20/2011
Conclusions
December 31,2011
BANK CONFIRMATION
ash-related transactions occur within the year.

d on the balance sheet at year-end.
ut restrictions or if with restrictions, properly indicated in the balance sheet.
n the balance sheet at year-end.
ncies, liens, pledges, restrictions on the entity's asset and guaranteed amounts.
closed during the period.
r if bank did not respond after a reasonable amount of time.

per reply against balances per books.
on of cash in bank as a result of the restriction.
Second time sending Balance per bankWP

Receipt date Balance per TB
(date/ initials) confirmation Ref
12/22/2011 14,267,272.00 14,267,272.00 No exceptio
Prepared by:
EAU
Reviewed by:
SSM
C3
Remarks
No exceptions noted
Date:
1/9/2012
Date:
1/9/2012
Dece
BANK COM
ORIGINAL
To be mailed to accountant
PCI Bank
180 Sucat Road, Paranaque City
1. At the close of business on the date listed above, our records indicated the follow
Interest Rate
Account Name Account No. Rate
Regular Checking (P.A.)
775
Account
Savings Account
Time Deposit 18%
2. We were directly liable to the financial institution for loans at the close of busines
Account No./ Date
Balance
Description Due
Loans 10,000,000 ###
Sarah B. Tuason - Treasurer

Customer's Authorized Signature
The information presented above by the customer is on agree

Although we have not conducted a comprehensive detailed se
no other deposit or loan accounts have come to our attention
Sandra Lee / VP - Accounts

Financial Institution Authorized Signature
EXCEPTIONS AND/OR COMMENTS
Please return this form directly to our auditors:
CONCLUSIONS
December 31,2011
BANK COMFIRMATION LETTER
GRACE CORPORATION
We have provided to our accounts the following information as of the close of business
on December 31 , 2011, regarding our deposit and loan balances. Please confirm the
accuracy of the information, noting any exceptions to the information provided. If the
balances have been left blank, please complete this form by furnishing the balance in
the appropriate space below. Although we do not request nor expect you to conduct a
comprehensive, detailed search of your records, if, during the process of completing this
confirmation, additional information about other deposit and loan accounts we may have
with you comes to your attention, please include such information below. Please use the
enclosed envelope to return the original directly to our auditors, Lim & Associates.
, our records indicated the following deposit balance(s):

Interest Rate
Balance
Paid Up To
1 year 14, 267, 272
Maturity (Due Date: June 30,
6,500,000
2012)
n for loans at the close of business on the date listed above as follows:
Date Through
Interest Rate Which Interest Description of Collateral
Is Paid
21% 12/28/2012 Land
B. Tuason - Treasurer ###

s Authorized Signature Date
ove by the customer is on agreement with our records.

ted a comprehensive detailed search of our records,
unts have come to our attention except as noted below.
a Lee / VP - Accounts ###

tution Authorized Signature Date
EXCEPTIONS AND/OR COMMENTS
y to our auditors: LIM & ASSOCIATES

Rm. 307 ABC Building, Ayala Avenue
Makati City
Prepared by:
EAU
CRS
ARC
Reviewed by:
SSM
C3.1
the close of business
s. Please confirm the
ation provided. If the
ishing the balance in
pect you to conduct a
ess of completing this
accounts we may have
below. Please use the
, Lim & Associates.
72
ion of Collateral
Land
Date:
###
###
###
Date:
###
December 31,2011
FOREIGN EXCHANGE RATES
Audit Objectives
1. To determine indications of foreign currency transactions.
2. To verify the existence of foreign currency transactions.
3 To determine whether amounts recorded are valued appropriately.
4 To determine whether all foreign currency transactions are recorded in the proper a
Assertions Affected
1. Existence
2. Valuation
3. Completeness
Audit Procedures
1. Inquire management about any contracts involving foreign entities or if the entity
has any bank accounts, abroad.
2. Verify if appropriate exchange rates were used in the transactions.
3. Note for differences.
Findings
There were no foreign currency transactions.
Conclusion
Prepared by:
MKKRA
RAC
Reviewed by:
SSM
C4
opriately.
re recorded in the proper accounting period.
gn entities or if the entity
nsactions.
Prepared by: Date:

###
###
Reviewed by: Date:

###
December 31,2011
ANALYTICAL
PROCEDURES
Audit Procedures
1. Compare the beginning and ending balances of cash.
2. Compute for the variance and percentage difference.
3. Understand the events that led to such changes.
Findings
CASH
This account consists of:
### ### Variance
Cash in Bank 1,000,000.00 14,230,755.00 ###

Petty Cash 100,000.00 1,404.00 (98,596.00)
Total Cash 1,100,000.00 14,232,159.00 ###
Conclusion
1. There was a 1323.08% increase in Cash in Bank of Grace Corporation. This was due
cash sales and payments of accounts as reflected in the Cash Receipts book for the y
2. There was a 98.60% decrease in Petty Cash fund due to unreplenished vouchers.
3. Total cash as of 2011 has increased significantly in comparison to last year's cash b
due to the fact that cash sales and payments from customers has increased substanti
31,2011
TICAL
DURES
C5
% per Year Over

%Change Total Cash
2010 2011
1323.08% 90.91% 99.99%
-98.60% 9.09% 0.01%
### 100.00% 100.00%
ration. This was due to an increase in

eipts book for the year 2011.
enished vouchers.
to last year's cash balance. This may be
increased substantially.
Prepared Date:
MKKRA 1/11/2012
RAC 1/11/2012
ReviewedDate:
SSM 1/15/2012
LEAD S
BALANCE
ACCOUNT NUMBER ACCOUNT NAME WP REF.
2009
103 Marketable Securities D 1,010,000.00
Investments in Time Deposits D 0.00
Total 1,010,000.00
December 31,2011
LEAD SCHEDULE - FINANCIAL INSTRUMENTS

2010 BALANCE 2011 Debit Credit BALANCE 2011
1,150,000.00 9,500,000.00 1,630,000.00 8,585,000.00 ###
0.00 0.00 6,500,000.00 0.00 ###
1,150,000.00 9,500,000.00 8,130,000.00 8,585,000.00 ###
D
DIFFERENCE% CHANGE
### 121.30%
### -%
### 686.52%
Audit Objectives
1. To determine that changes to marketable securities represent amounts that are rea
2. To determine that the marketable securities are recorded properly.
3. To determine that accounts are properly classified and described, and adequate disc
Assertions Affected
1. Existence
2. Valuation
Audit Procedures
1. Perform tests of mathematical computations to the extent deemed necessary.
2. Determine reasonableness of the amounts.
3. Inquire management for any differences found.
Findings
1. The general ledger account balance shows a discrepancy in its ending balance when
Beginning Balance TB 1,150,000.00

Debits from purchases and dividends D1.1 5,580,000.00
Credits from sale of A. Soriano Shares D1.1 ###
Time deposits D1.1 6,500,000.00
Sale of Securities from last year TB ###
Total Interim Balance ###
Interim Balance as per GL ###
Excess credits to Marketable Securities 500,000.00
This error may be due to the fact that the marketable securities account has been cred
PAJE1
Marketable Securities 500,000.00
To correct Marketable Securities account
2. Time deposits have been wronfully classified as marketable securities and should be
PAJE2
Investments in Time Deposits 6,500,000.00
To reclassify the Time Deposits
3. The Marketable securities account has also been wronfully credited with the amount
Total Credits from Sale D1.1 2,080,000.00

A. Soriano Carrying Amount D1.1 (950,000.00)
Gain on sale credited to Marketable Securities ###
To correct this, the following PAJE is necessary:
PAJE3
Marketable Securities 1,130,000.00
To correct the credit to marketable secrutities from sale of A. Soriano shares
4. The recomputation for the marketable securities are based on the closing market va
Security Name Cert. No. No. of Shares
PLDT 993 2,000
A. Soriano Corp 828 95,000
PLDT - Stock Dividend 1082 400
San Miguel 750 4,000
Philex Mining 820 500,000
Omico 725 10,000,000
Total
The entries to record the changes in fair value are:
PAJE4
Loss from Decrease in Fair Value-
Loss
Philexfrom Decrease in Fair Value-
Mining 700,000.00
Omico 1,781,000.00
Gain from increase in Fair Value - PLDT
Gain fromIncrease in Fair Value - San Miguel
To record changes in fair value
Legend
TB - Traced from Trial Balance
D1.1 - Traced from D1.1
O - Fair value at year end less cost
P - Number of shares multiplied by closing fair value per share for each kind of share
Conclusion
Aside from the PAJE above, no other exceptions were noted.
December 31,2011
RECOMPUTATION OF MARKETABLE SECURITIES
ent amounts that are reasonably expected to be realized through future operations.
ribed, and adequate disclosures have been made.
deemed necessary.
its ending balance when compared to the information provided by the company. This is illustrated as
es account has been credited by the amount of proceeds rather than its carrying amount. To correct th
500,000.00
securities and should be reclasiffied. The PAJE to correct this is
6,500,000.00
credited with the amount equal to its proceeds from sale of A. Soriano shares rather than its carrying a
1,130,000.00
ale of A. Soriano shares
on the closing market values of shares on December 31 as follows:

of Shares Cost Sales Change in Fair Value Fair Value at Year E
D1.1 500,000.00 180,000.00 O
D1.1 950,000.00 D1.1 (950,000.00) 0.00
D1.1 0.00 136,000.00 O
D1.1 720,000.00 80,000.00 O
D1.1 ### (700,000.00) O
D1.1 ### (1,781,000.00) O
### ### (2,085,000.00)
316,000.00
80,000.00
2,085,000.00
SECURITIES D1
mpany. This is illustrated as follows:
rrying amount. To correct this, a PAJE should be recorded as follows:

es rather than its carrying amount.
Fair Value at Year End

680,000.00 P
0.00
136,000.00 P
800,000.00 P
910,000.00 P
19,000.00 P
2,545,000.00
Prepared byDate:
MRL 1/12/2012
Reviewed by
Date:
SPR 1/13/2012
MARKETABLE SECURITIES
MARKETABLE SECURITIES
A. Securities Count, January 5, 2012
Date Issued Certificate No. Name of Compa
05.10.2011 993 PLDT

07.31.2011 1082 PLDT
05.10.2011 750 San Miguel
05.10.2011 820 Philex Mining
05.10.2011 725 Ornico
B. PCIB time deposit - 1 year maturity, due date June 30, 2012 - P 6,500,000.00
1. All of the above securities and Time Deposit Certificate were i

2. The Custodian (Ms. Sarah B. Tuason) acknowledged the retur
C. From Makati Stock Exchange Monthly Review for December,
Name Opening High
PLDT P 400 P 400

San Miguel 230 250
Philex Mining 1.9 1.9
Ornico 0.002 0.002
D. The following information relate to the stock investment of the Grace Corpora
Purchases / Stock Dividend:
Date Security Name Cert. No

03.08.2011 PLDT 993
05.10.2011 A Soriano Corp. 828
07.15.2011 PLDT - Stock Ex 1082
05.10.2011 San Miguel 750
05.10.2011 Philex Mining 820
05.10.2011 Ornico 725
Total debited to temporary investments

Broker's Commissions (5%) debited to Miscellaneous Expenses
Sales:
Date Security Name Cert. No.
11.20.2011 A. Soriano Corp. 828
Total amount credited to Marketable Securities

5% Broker's Commissions - debited to Miscellaneous Expenses
Dividends:
Declared Date received
By Date or to be received
Stock: PLDT 07.14.2011 07.31.2011 (Cert. # 1082)

Cash: San Miguel 12.15.2011 01.15.2012
RITIES D1.1
No. of Shares Par Value
2,000 P 200.00 / share

400
4,000 100.00 / share
500,000 1.00 / share
10,000,000 .01 / share
30, 2012 - P 6,500,000.00
Deposit Certificate were in the name of

) acknowledged the return
Low Closing
P 300 P 340
180 200
1.6 1.82
0.0015 0.0019
ment of the Grace Corpora
No. of Shares
2,000 @ P 250.00 P 500,00.00
95,000 @ P 10.00 950,000.00
400 @ P 320.00 -
4,000 @ P 180.00 720,000.00
500,000 @ P 3.22 1,610,00.00
10,000,000@ P0.18 1,800,000.00
P 5,580,000.00
P 279,000.00
No. of Shares
95,000
P 2,080,000.00
P 104,000.00
e received
2011 (Cert. # 1082) 400 shares

P 10 / share
Decem
ANALYTIC
Audit Objectives
1. To assist the auditor in planning the nature, timing, and extent of other auditing pro
2. To obtain evidential matter about particular assertions related to account balances
3. To be used as an overall review of the financial information in the final review stage
Audit Procedures
1. Compare account balances in prepayments and other current assets accounts with
or deviations from trends.
Findings
WP BALANCE ADJUSTED
ACCOUNT TITLE
Ref 2010 BALANCE 2011
Marketable Securities D1 ### 2,545,000.00
Investments in Time Deposits 0.00 6,500,000.00
Total ### 2,545,000.00
Conclusion
1. The 121.30% increase in marketable securities is due to purchases of new equity se
December 31,2011
ANALYTICAL PROCEDURES
extent of other auditing procedures.

lated to account balances or classes of transactions.
on in the final review stage of the audit.
rrent assets accounts with the preceding year or years. Investigate significant changes in amounts
DIFFERENC
% CHANGE
E
1,395,000.00 121.30%
0.00 -%
###### 121.30%
purchases of new equity securities. Prepared by

MRL
Reviewed by
SSM
D2
changes in amounts
Date:
1/13/2012
Date:
1/13/2012
LEAD SCHEDUL
WP
BALANCE
ACCOUNT NUMBER ACCOUNT NAME REF
2009
.
104 Accounts Receivable E 4,650,000.00
104-A Allowance for Bad debts E 0.00
Accounts Receivable - Others E 4,200,000.00
105 Notes Receivable E 600,000.00
107 Accrued Interest Receivable E 0.00
TOTAL ###
December 31,2011
LEAD SCHEDULE - TRADE AND OTHER RECEIVABLES

2010 BALANCE 2011 Debit Credit BALANCE 2011
5,850,000.00 10,318,635.00 ### ### 9,368,410.00
0.00 497,811.00 5,190.50 0.00 492,620.50
6,400,000.00 0.00 303,600.00 0.00 303,600.00
1,500,000.00 2,970,000.00 0.00 500,000.00 2,470,000.00
0.00 38,853.00 59,652.21 0.00 98,505.21
### ### ### ### ###
E
DIFFERENCE % CHANGE
3,518,410.00 60.14%
492,620.50 -
(6,096,400.00) -95.26%
970,000.00 64.67%
98,505.21 -
### 29.55%
December 31,201
AGREEING GENERAL LEDGER
LEDGER
Audit Objectives
1. To determine that receivables exist as of the balance sheet date.
2. To verify the existence of the accounts receivables.
3. To determine whether balance of accounts of the debtors are accurate.
4. To determine whether all transactions relative to receivables are recorded in the p
Assertions Affected
1. Existence
2. Valuation
3. Completeness
Audit Procedures
1. Obtain a schedule or list of customers with their corresponding balances.
2. Check and recalculate total balance of Subsidiary Ledger and compare to General
3. Reconcile with amount in trial balance.
4. Determine discrepancies noted during investigation and make the necessary propo
5. Interview management of any discrepancy in amounts.
Findings
The Accounts Receivable Subsidiary Ledger, Sales Book Journal, Cash Receipts Jo
referenced with each other. The audit team noted the following discrepancies:
1. Account No. 112- Gwendo Reyes has an unadjusted negative balance of P
PAJE 1 a Accounts Receivable - Gwendo Reyes
Accounts Payable - Gwendo Reyes
To eliminate negative balance in Gwendo Rey
2. On Account No. 111 – Anna Reyes (employee), SI 1251 (P 246, 825) and O
following transactions were already recorded on Account No. 103 – Eagle Contra
account to obtain the correct ending balance.
3. SI 1259 (P 75, 805) and SI 1260 (P 111, 395), with a total amount of P 187
Block’s account. The corresponding OR No. 114 (P 187, 200) is the cash paymen
4. SI 1257 (P 86, 850) and OR No. 117 (P 86, 850) was both erroneously reco
5. SI 1253 (P 58, 035) and OR No. 110 (P 58, 035) was not recorded on Samp
Alano Trading’s Account (No. 128) in the amount of P 580, 350, both for SI 1253
6. OR No. 118 (P 484, 000) was not reflected on Account No. 102 – Louie Tan
7. OR No. 121 (P 93,750) was not reflected on Account No. 113 – Benitez Mer
8. OR No. 122 (P 204, 475) was not reflected on Account No. 121 – Susan de
9. SI 1266 (P 232, 000) from Benitez Merchandising (credit sale) was not rec
The entry for this sale is recorded in procedure E7, PAJE 5 with its correspo
10. There has been a discrepancy when in the recomputation of the Accounts R
Accounts Receivable General Journal. The Accounts Receivable beginning balanc
P 15, 800, 000 on the recomputed amount of Accounts Receivable – Beginning B
11. Account No. 111 - Anna Reyes (employee) should be accounted for as Receiv
PAJE 2 m Receivable from Employees - Anna Reyes
Accounts Receivable - Anna Reyes (employee
To reclassify accounts appropriately.
Legend
a Account no. 112, Gwendo Reyes (Receivable) has a negative balance henc
m To reclassify Account No. 111 - Anna Reyes (employee) to Receivable from
During the conduct of the said audit procedure, the audit team discovered discre
Conclusion
determine whether or not the receivables exist, valuated correctly and recorded
Accounts Receivable Subsidiary Ledger, General Ledger, Sales Book, Sales Invoic
there were no further exceptions noted. (See E1A for the summary of results in a
of the effects of adjustments to each account on the accounts receivable subsidi
December 31,2011
NERAL LEDGER TO SUBSIDIARY
LEDGER
are accurate.
es are recorded in the proper accounting period.
ding balances.
nd compare to General Ledger.
ake the necessary proposed adjustments.
ournal, Cash Receipts Journal, Sales Invoices and Official Receipts were checked and cross-
llowing discrepancies:
d negative balance of P 50, 000

50,000.00
wendo Reyes
balance in Gwendo Reyes' account
1251 (P 246, 825) and OR No. 106 (P246, 825) were erroneously recorded to this account. The
No. 103 – Eagle Contractors. These should be eliminated from Anna Reyes’ subsidiary ledger
a total amount of P 187, 200 are cash sales and thus, should not be reflected on Building
00) is the cash payment of SI 1259 and SI 1260.
s both erroneously recorded on Account No. 127 – Luli Samson in the amount of P 868, 500 each.
s not recorded on Sampollo Company’s account and was instead erroneously recorded on J.R.
0, 350, both for SI 1253 and OR No. 110.
unt No. 102 – Louie Tan.
nt No. 113 – Benitez Merchandising.
unt No. 121 – Susan de Leon.
(credit sale) was not recorded on the Sales Journal.
PAJE 5 with its corresponding output tax.
tation of the Accounts Receivable Subsidiary Ledger in comparison to the amount shown on
ivable beginning balance was P 15, 316, 000 on the Accounts Receivable General Journal and
eceivable – Beginning Balance.
accounted for as Receivable from Employees instead of accounting it as part of Trade Rece
Anna Reyes 300,000.00
- Anna Reyes (employee)
s appropriately.
negative balance hence, adjustment is proposed to eliminate the negative amount.

yee) to Receivable from Employees.
team discovered discrepancies between the subsidiary ledger and general ledger. To
correctly and recorded properly, the audit team vouched and cross referenced the following:
Sales Book, Sales Invoices and Official Receipts. Other than the proposed adjusting entries,
summary of results in agreeing subsidiary ledger to general ledger and E1B for the overview
ounts receivable subsidiary ledger.) Prepared by:
MKKRMA
ARC
Reviewed by:
CDS
E1
checked and cross-
50,000.00
ed to this account. The

eyes’ subsidiary ledger
flected on Building
mount of P 868, 500 each.

eously recorded on J.R.
he amount shown on
le General Journal and
s part of Trade Rece
300,000.00
ative amount.
neral ledger. To
erenced the following:
ed adjusting entries,
d E1B for the overview
Date:
1/20/2012
1/20/2012
Date:
1/24/2012
Decemb
AGREEING GE
SUBSIDI
Account
Name of Customer
No.
101 Rex Enterprises
102 Louie Tan
103 Eagle Contractors
104 Valera Company
105 Ida Coronel
106 Alberto & Associates, CPAs
107 Legarda Company
108 Cora Tayag
109 Dynasty Construction
111 Anna Reyes-employee
112 Gwendo Reyes
113 Benitez Merchandising
114 Lighthouse Commercial
115 Building Blocks, Inc.
117 Solomon Enterprises
118 Carlo Santos
119 Chad Acosta
120 J.R. Alano
121 Susan de Leon
123 Roces, Adriano & Salas, CPAs
124 R.V. Castro & Co.
125 Johann Morales
126 Centeno, Antonio & Tantoco, CPA
127 Luli Samson
128 J.R. Alano Trading
TOTAL E1.1
SI OR DATE AD
Errors
Advances from Gwendo ReyE1.1
Anna Reyes - employee
Building Blocks, Inc.
Luli Samson
J.R. Alano Trading
Sampollo Company
Anna Reyes - employee E1.1
Unrecorded Payments
1240 118 12/28/2011 Louie Tan
1266 121 12/31/2011 Benitez Merchandising
1258 122 12/31/2011 Susan de Leon
Unrecorded Credit Sales
121 12/31/2011 Benitez Merchandising
TOTAL
AR General Ledger E1.1

Reasons due to differences between
Subsidiary and General Ledger:
Louie Tan E1.1
TOTAL
Legend
C1.1 Traced from Official Receipts.
E1.1 Traced from Accounts Receivable - Subsidiary Ledger
E1.2 Traced from Sales Invoices.
a PAJE 1 Account no. 112, Gwendo Reyes (Receivable) has a negative balanc
b In Account No. 111, Anna Reyes (Receivable), SI 1251 (P 246, 825) w
Also, OR 106 (P 246, 825) was erroneously recored to this account i
c In Account No. 111, Anna Reyes (Receivable), SI 1259 and SI 1260 a
In addition, the amount credited (P187200) should be recorded as p
However, no PAJE is needed due to the fact that the amounts given
d In Account No. 127, Luli Samson, there was a sliding error in recordi
This caused overstatement in recording the invoice and payment on
is already reflected and recorded in the General Ledger.
e In Account No. 128, J.R. Alano Trading, SI 1253 (P 580,350) and OR
recorded both at P 58, 035 and recorded to Sampollo Company. No
f To record unrecorded sales and subsequent payment of Sampollo C
g To record unrecorded payment on Account No. 102, Louie Tan (P 48
h To record unrecorded payment on Account No. 113, Benitez Mercha
What is needed is the presentation of the transaction on the subsidi
i To record unrecorded payment on Account No. 121, Susan de Leon
What is needed is the presentation of the transaction on the subsidi
j PAJE 2 To recorded unrecorded credit sales (SI 1266) from Account No. 113
k Footed.
l When the beginning balance was recomputed, the auditors found di
on the records. This pertains to payment (OR No. 118) by Louie Tan
This was already considered paid, when the fact is other wise. This
should not be deducted on the beginnning balance.
m PAJE 3 To reclassify Account No. 111 - Anna Reyes (employee) to Receivab
December 31,2011
AGREEING GENERAL LEDGER TO
SUBSIDIARY LEDGER
Beg. Balance, Dec. 1 Debit Credit
1,700,000.00
1,284,000.00
300,000.00 246,825.00 246,825.00
410,000.00 410,000.00
528,000.00 138,285.00 528,000.00
150,000.00
224,500.00 224,500.00
757,500.00 289,875.00 757,500.00
50,000.00 4,625.00 4,625.00
300,000.00 246,825.00 246,825.00
-50,000.00
370,000.00 1,021,475.00 1,391,475.00
186,500.00
575,000.00 187,200.00 187,200.00
520,000.00 520,000.00
264,000.00
681,000.00 681,000.00
1,600,000.00
1,060,000.00 204,475.00 1,060,000.00
1,700,000.00
1,224,500.00
970,000.00 970,000.00
736,000.00
845,000.00 868,500.00 1,713,500.00
150,000.00 580,350.00 580,350.00
15,800,000.00 k E1.1 4,524,435.00 k E1.1 9,521,800.00
ADJUSTMENTS TO SUBSIDIARY LEDGER
50,000.00 a
E1.1 -246,825.00 b E1.1 -246,825.00
E1.1 -187,200.00 c E1.1 -187,200.00
E1.1 -781,650.00 d E1.1 -781,650.00
E1.1 -580,350.00 e E1.1 -580,350.00
E1.1 58,035.00 f E1.1 58,035.00
-300,000 m
C1.1 484,000.00
C1.1 93,750.00
C1.1 204,475.00
E1.2 232,000.00 j
15,550,000.00 k 3,018,445.00 k 8,566,035.00
15,316,000.00 E1.1 2,786,445.00 E1.1 7,783,810.00

ces between
al Ledger:
484,000.00 l
15,800,000.00 k
ubsidiary Ledger
ceivable) has a negative balance hence, adjustment is proposed to eliminate the negative amount.
eivable), SI 1251 (P 246, 825) was erroneously recorded to this account instead on Eagle Contractor's
eously recored to this account instead of recording it as Eagle Contractor's payment.
eivable), SI 1259 and SI 1260 amounting to P187,200 should be accounted for as cash sales and not d
87200) should be recorded as payment of Building Blocks.
he fact that the amounts given are already reflected and included in Cash - General Ledger.
re was a sliding error in recording SI 1257 and OR 117 which should be 86850 instead of 868500.
ing the invoice and payment on account. However, no PAJE should be recorded because the correct am
he General Ledger.
g, SI 1253 (P 580,350) and OR 110 (P 580,350) was erroneously recorded in this account. SI 1253 and
ded to Sampollo Company. No PAJE is required as this was correctly reflected and recorded in the Gen
equent payment of Sampollo Company in the amount of P 58,035.
ccount No. 102, Louie Tan (P 484,000), OR No. 118 Cash settlement is already reflected on the Cash Au
ccount No. 113, Benitez Merchandising (P 93,750) OR No. 121. Cash settlement is already reflected on
f the transaction on the subsidiary ledger.
ccount No. 121, Susan de Leon (P 204,475), OR No. 122. Cash settlement is already reflected on the Ca
f the transaction on the subsidiary ledger.
(SI 1266) from Account No. 113, Benitez Merchandising (P 232,000) made on 12/30/2011.
omputed, the auditors found discrepancies between the amount computed and the amount shown
ment (OR No. 118) by Louie Tan to its account evidenced by SI 1240 in the amount of P 1, 284,000.
hen the fact is other wise. This payment was actually made on a later date, 12/28/2011 and thus,
nning balance.
Reyes (employee) to Receivable from Employees.
E1A
End Balance, Dec.
30
1,700,000.00
1,284,000.00
300,000.00
-
138,285.00
150,000.00
-
289,875.00
50,000.00
300,000.00
-50,000.00
-
186,500.00
575,000.00
-
264,000.00
-
1,600,000.00
204,475.00
1,700,000.00
1,224,500.00
-
736,000.00
-
150,000.00
k E1.1 10,802,635.00 k
E1.1 50,000.00 a
b
c
d
e
f
E.1.1 -300,000 m
g
h
i
k 10,002,410.00 k
E1.1
10,802,635.00 k
negative amount.
on Eagle Contractor's account
s cash sales and not debited to this account.
eral Ledger.
stead of 868500.
because the correct amount
account. SI 1253 and OR 110 should be

d recorded in the General Ledger.
flected on the Cash Audit.

s already reflected on the Cash Audit.
ady reflected on the Cash Audit.
/30/2011.
the amount shown
nt of P 1, 284,000.
8/2011 and thus,
ADJUSTMENTS OF CUSTOM
Beg. Balance,
Acct. No. Name of Customer Debit Credit
Dec. 1
101 Rex Enterprises 1,700,000.00

102 Louie Tan 1,284,000.00
103 Eagle Contractors 300,000.00 246,825.00 246,825.00
104 Valera Company 410,000.00 410,000.00
105 Ida Coronel 528,000.00 138,285.00 528,000.00
106 Alberto & Associates, CPAs 150,000.00
107 Legarda Company 224,500.00 224,500.00
108 Cora Tayag 757,500.00 289,875.00 757,500.00
109 Dynasty Construction 50,000.00 4,625.00 4,625.00
111 Anna Reyes-employee 300,000.00 246,825.00 246,825.00
112 Gwendo Reyes -50,000.00
113 Benitez Merchandising 370,000.00 1,021,475.00 1,391,475.00
114 Lighthouse Commercial 186,500.00
115 Building Blocks, Inc. 575,000.00 187,200.00 187,200.00
117 Solomon Enterprises 520,000.00 520,000.00
118 Carlo Santos 264,000.00
119 Chad Acosta 681,000.00 681,000.00
120 J.R. Alano 1,600,000.00
121 Susan de Leon 1,060,000.00 204,475.00 1,060,000.00
123 Roces, Adriano & Salas, CPAs 1,700,000.00
124 R.V. Castro & Co. 1,224,500.00
125 Johann Morales 970,000.00 970,000.00
126 Centeno, Antonio & Tantoco, CPA 736,000.00
127 Luli Samson 845,000.00 868,500.00 1,713,500.00
128 J.R. Alano Trading 150,000.00 580,350.00 580,350.00
Sampollo Company
TOTAL E1.1 15,800,000.00 4,524,435.00 9,521,800.00
Legend
a Account no. 112, Gwendo Reyes (Receivable) has a negative balance hence,
b In Account No. 111, Anna Reyes (Receivable), SI 1251 (P 246, 825) was erron
Also, OR 106 (P 246, 825) was erroneously recored to this account instead of
c In Account No. 111, Anna Reyes (Receivable), SI 1259 and SI 1260 amounting
In addition, the amount credited (P187200) should be recorded as payment o
However, no PAJE is needed due to the fact that the amounts given are alread
d In Account No. 127, Luli Samson, there was a sliding error in recording SI 125
This caused overstatement in recording the invoice and payment on account.
e In Account No. 128, J.R. Alano Trading, SI 1253 (P 580,350) and OR 110 (P 58
recorded both at P 58, 035 and recorded to Sampollo Company. No PAJE is re
f To record unrecorded sales and subsequent payment of Sampollo Company i
g To record unrecorded payment on Account No. 102, Louie Tan (P 484,000), O
h To record unrecorded payment on Account No. 113, Benitez Merchandising (P
What is needed is the presentation of the transaction on the subsidiary ledge
i To record unrecorded payment on Account No. 121, Susan de Leon (P 204,47
What is needed is the presentation of the transaction on the subsidiary ledge
j To recorded unrecorded credit sales (SI 1266) from Account No. 113, Benitez
E1.1 Traced from Accounts Receivable - Subsidiary Ledger
OF CUSTOMER ACCOUNT BALANCES
End Balance, Unrecorded
Errors
Dec. 30 Sales
Debit Credit Debit
1,700,000.00
1,284,000.00 E1.1
300,000.00
-
138,285.00
150,000.00
-
289,875.00
50,000.00
E1.
300,000.00 1 (246,825.00) b E1.1 (546,825.00) b
E1.
-50,000.00 1 (50,000.00) a
- E1.1 232,000.00 j E1.1
186,500.00
E1.
575,000.00 1 (187,200.00) c E1.1 (187,200.00) c
-
264,000.00
-
1,600,000.00
204,475.00 E1.1
1,700,000.00
1,224,500.00
-
736,000.00
E1.
-1 (781,650.00) d E1.1 (781,650.00) d
E1.
150,000.00 1 (580,350.00) e E1.1 (580,350.00) e
E1.
1 58,035.00 f E1.1 58,035.00 f
10,802,635.00 ### ### 232,000.00
ive balance hence, adjustment is proposed to eliminate the negative amount.

246, 825) was erroneously recorded to this account instead on Eagle Contractor's account
account instead of recording it as Eagle Contractor's payment.
d SI 1260 amounting to P187,200 should be accounted for as cash sales and not debited to this accoun
orded as payment of Building Blocks.
nts given are already reflected and included in Cash - General Ledger.
in recording SI 1257 and OR 117 which should be 86850 instead of 868500.
ayment on account. However, no PAJE should be recorded because the correct amount is already refle
) and OR 110 (P 580,350) was erroneously recorded in this account. SI 1253 and OR 110 should be
mpany. No PAJE is required as this was correctly reflected and recorded in the General Ledger.
ampollo Company in the amount of P 58,035.
Tan (P 484,000), OR No. 118 Cash settlement is already reflected on the Cash Audit.
ez Merchandising (P 93,750) OR No. 121. Cash settlement is already reflected on the Cash Audit.
he subsidiary ledger.
n de Leon (P 204,475), OR No. 122. Cash settlement is already reflected on the Cash Audit.
he subsidiary ledger.
nt No. 113, Benitez Merchandising (P 232,000) made on 12/30/2011.
E1B
Unrecorded Adjusted
Remarks
Payment Balance
Credit
1,700,000.00 exceptions noted.
484,000.00 g 800,000.00
300,000.00 exceptions noted.
- exceptions noted.
138,285 exceptions noted.
- exceptions noted.
-
-
93,750.00 h 138,250.00
575,000.00
- exceptions noted.
- exceptions noted.
204,475.00 i -
- exceptions noted.
-
150,000.00
-
782,225.00 10,002,410.00
's account
debited to this account.
amount is already reflected and recorded in the General Ledger.

d OR 110 should be
eneral Ledger.
n the Cash Audit.
Cash Audit.
ACCOUNTS RECEIVABLE SUBSIDIARY
LEDGERS
NAME: Rex Enterprises ACCOUNT NO.:

ADDRESS: 33 Teresa St., Metro Manila
DATE PARTICULARS DEBIT CREDIT
Sept. 15 1,700,000.00
NAME: Louie Tan ACCOUNT NO.:

ADDRESS: 40 Bambang St., Metro Manila

2011
Nov. 30 1,284,000.00
Dec. 28 OR 118 484,000.00
NAME: Eagle Contractors ACCOUNT NO.:

ADDRESS: 11 Forbes St., Makati

2011
Nov. 20 300,000.00
Dec. 1 SI 1251 246,825.00
11 OR 106 246,825.00
NAME: Valera Company ACCOUNT NO.:

ADDRESS: 705 Aurora Bldg., Cubao, Quezon City

2011
Nov. 18 SI 1070 410,000.00
Dec. 15 OR 109 410,000.00
NAME: Ida Coronel ACCOUNT NO.:

ADDRESS: 63 Manotoc St., Quezon City

2011
Nov. 30 SI 1152 528,000.00
Dec. 15 SI 1256 138,285.00
12 OR 107 528,000.00
Dec. 12 OR 107 528,000.00
15 SI 1256 138,295.00
NAME: Alberto & Associates, CPAs ACCOUNT NO.:

ADDRESS: 128 Pebble Road, Mandaluyong, MM

2011
Sept. 15 150,000.00
NAME: Legarda Company ACCOUNT NO.:
ADDRESS: 23 Hidalgo, Binondo, Manila

2011
Nov. 19 SI 1121 224,500.00
Dec. 1 OR 101 224,500.00
NAME: Cora Tayag ACCOUNT NO.:

ADDRESS: 1642 Reyes Avenue, Manila

2011
Nov. 27 SI 1100 757,500.00
Dec. 17 OR 111 757,500.00
27 SI 1161-1162 289,875.00
NAME: Dynasty Construction ACCOUNT NO.:

ADDRESS: 36 Rizal Avenue, Sta. Cruz, Manila

2011
Nov. 8 50,000.00
Dec. 3 SI 1252 4,625.00
23 OR 115 4,625.00
NAME: Anna Reyes - employee* ACCOUNT NO.:
ADDRESS: 16 Legarda St., Manila

2011
Nov. 20 300,000.00
Dec. 1 SI 1251 246,825.00
11 OR 106 246,825.00
NAME: Gwendo Reyes ACCOUNT NO.:

ADDRESS: 85 Cantada St., Diliman, Quezon City

2011
Oct. 30 300,000.00
Nov. 5 OR 86 350,000.00
PAJE 1 50,000.00
NAME: Benitez Merchandising ACCOUNT NO.:

ADDRESS: 582 Kamagong St., Makati City

2011
Nov. 28 SI 1135 370,000.00
Dec. 5 OR 103 370,000.00
10 SI 1254 - 1255 1,021,775.00
13 Sales returns & allowances 21,475.00
OR 113 1,000,000.00
30 SI 1266 (PAJE 2) 232,000.00
31 OR 121 93,750.00
NAME: Lighthouse Commercial ACCOUNT NO.:

ADDRESS: 785 Ayala Avenue, Makati City

2011
Mar. 21 100,000.00
Apr. 19 86,500.00
NAME: Building Blocks, Inc. ACCOUNT NO.:

ADDRESS: 220 Ortigas St., Mandaluyong

2011
Nov. 19 575,000.00
Dec. 23 SI 1259 75,805.00
SI 1260 111,395.00
23 OR 114 187,200.00
NAME: Solomon Enterprises ACCOUNT NO.:

ADDRESS: 326 Quirino Avenue, Baclaran

2011
Nov. 30 SI 1149 520,000.00
Dec. 5 Sales returns & allowances 20,000.00
8 OR 105 500,000.00
NAME: Carlo Santos ACCOUNT NO.:
ADDRESS: 25 Lumot St., Tondo, Manila

2011
3-Jun 264,000.00
NAME: Chad Acosta ACCOUNT NO.:

ADDRESS: 85 Laong-Laan St., Metro Manila

2011
Nov. 25 SI 1242 681,000.00
Dec. 18 OR 112 681,000.00
NAME: J. R. Alano ACCOUNT NO.:

ADDRESS: 162 Laong-Laan St., Metro Manila

2011
Oct. 5 1,600,000.00
NAME: Susan de Leon ACCOUNT NO.:
ADDRESS: 482 Rizal Avenue, Metro Manila

2011
Nov. 27 SI 1125 1,060,000.00
Dec. 1 OR 102 1,060,000.00
22 SI 1258 204,475.00
31 OR 122 204,475.00
NAME: Roces Adriano & Salas, CPAs ACCOUNT NO.:

ADDRESS: Rm. 307 ABC Bldg., Ayala Avenue, Makati City

2011
Nov. 20 1,700,000.00
NAME: R.V. Castro & Co. ACCOUNT NO.:

ADDRESS: 1856 Ayala Avenue, Makati City

2011
Sept. 20 1,000,000.00
Nov. 30 224,500.00
NAME: Johann Morales ACCOUNT NO.:
ADDRESS: 2000 C.M. Recto Avenue, Manila

2011
Nov. 29 SI 1133 970,000.00
Dec. 8 OR 500,000.00
converted to 60-day 12% note 470,000.00
NAME: Centeno, Antonio & Tantoco, CPA ACCOUNT NO.:

ADDRESS: 296 Frisco St., Novaliches

2011
29-Dec SI 1263 736,000.00
NAME: Luli Samson ACCOUNT NO.:

ADDRESS: 852 Buendia Avenue, Makati City

2011
Nov. 29 SI 1231 845,000.00
Dec. 15 OR 108 845,000.00
20 SI 1257 868,500.00
27 OR 117 868,500.00
20 SI 1257 86,850.00
27 OR 117 86,850.00
NAME: J. R. Alano Trading ACCOUNT NO.:

ADDRESS: 555 Ilocos St., Metro Manila

2011
Nov. 8 150,000.00
Dec. 7 SI 1253 580,350.00
OR 110 580,350.00
Oct. 5 1,600,000.00
NAME: Sampollo Company ACCOUNT NO.:

ADDRESS:

Dec. 7 SI 1253 58035
12 OR 110 58035
E1.1
Legend
101 Note: Entries which has been
strickenthrough should not be
included in the Accounts
Receivable Subsidiary Ledger
BALANCE Accounts.
Moreover, correct entries are

1,700,000.00 colored in red.
102
BALANCE
1,284,000.00
808,000.00
103
BALANCE
300,000.00
546,825.00
300,000.00
104
BALANCE
410,000.00
105
BALANCE
528,000.00
666,285.00
138,285.00
138,295.00
106
BALANCE
150,000.00
107
BALANCE
224,500.00
108
BALANCE
757,500.00
289,875.00
109
BALANCE
50,000.00
54,625.00
50,000.00
111 *This account should be
(Receivable from Employees -
Anna Reyes and shoule be
reclassified to Accounts
BALANCE Receivable - Others.
300,000.00
546,825.00
300,000.00
112
BALANCE
300,000.00
-50,000.00
113
BALANCE
370,000.00
1,021,475.00
1,000,000.00
--
232,000.00
138,250.00
114
BALANCE
100,000.00
186,500.00
115
BALANCE
675,000.00
650,805.00
762,200.00
575,000.00
117
BALANCE
520,000.00
500,000.00
--
118
BALANCE
264,000.00
119
BALANCE
681,000.00
120
BALANCE
1,600,000.00
121
BALANCE
1,060,000.00
204,475.00
--
123
BALANCE
1,700,000.00
124
BALANCE
1,000,000.00
1,224,500.00
125
BALANCE
970,000.00
470,000.00
--
126
BALANCE
736,000.00
127
BALANCE
845,000.00
868,500.00
86,850.00
--
128
BALANCE
150,000.00
208,350.00
150,000.00
1,600,000.00
129
BALANCE
58035
--
SALES INVOICES
Grac CORPORATION
INVOIC
e VAT 2011-002-148 | TIN 4004-009-175

12 Ninoy Aquino Avenue, Paranaque City | Tel: 632 843 7689 | Telefax: 632 843 7690
Website: www.gracecorporation.biz.ph
Charged to: Eagle Contractors

Delivered to: 11 Forbes St., Makati City
Quantity Unit Description Unit P
1,250 box Plain Pencil - Mongol P 101

250 box Charcoal Pencil - Steadler 130.
10 box Silver Paper Clips 50
20 box Blackie Carbon Paper 145
150 ream Whitey Bond Paper 188.
200 ream Milky Onion Skin 159.
750 piece Bic Ballpen - Black 12.
750 piece Bic Ballpen - Blue 12.
400 piece Bic Ballpen - Red 12.
TOTA
12% interest per annum is to be charged on all overdue accounts, plus 23% on said amount for attornye's fees
and cost of collection, the parties expressly submit themselves to the jurisdiction of the Courts of the City of All merchandise cover
Manila in any legal action arising out of this transaction. Without in any way attempting to divert on any other verified and checked.
court or courts, returned goods will not be accepted without written authority from our office, the above
merchandise have been carefully counted, checked and packed, packages delivered by carrier should be
checked with those recorded above.
Received by:
Grac CORPORATION
INVOIC
e
VAT 2011-002-148 | TIN 4004-009-175
Charged to: Dynasty Construction

Delivered to: 36 Rizal Ave., Sta. Crux, Manila
350 piece Fastener P 1.

350 piece Folder - regular 4
60 bottle Elmer's Glue 35
20 box Roll-O Typewriter Ribbon 30
TOTA
Received by:
Grac CORPORATION
INVOIC
e VAT 2011-002-148 | TIN 4004-009-175

Charged to: Sampollo Company

Delivered to: 312 Arden St., Paranaque City

70 bottle Quink Ink P 82.
70 piece Pilot Fountain Pen 150
100 ream Whitey Bond Paper 188.
20 box Blackie Carbon Paper 145
80 ream Milky Onion Skin 159.
50 pads 10 Column Worksheet - Vernal 72.
50 pads 12 Column Worksheet - Vernal 72.
TOTA
Received by:
Grac CORPORATION
INVOIC
e VAT 2011-002-148 | TIN 4004-009-175

Charged to: Benitez Merchandising
Delivered to: 582 Kamagong St., Makati City
800 box Plain Pencil - Mongol P 101

700 box Chrcoal Pencil - Staedler 130.
500 pad 16 column worksheet - vernel 72.
1,500 pad Yello paper - Old Mill 43.
500 ream Bond Paper - Whitey 188.
700 ream Onion Skin - Milky 159.
300 roll Cartolina 12.
2,500 meter Plastic Cover 25
250 ream Art Paper 210
500 piece Folder - Regular 4
500 piece Folder - Long 5
TOTA
Received by:
Grac
e
Grac CORPORATION
INVOIC
e VAT 2011-002-148 | TIN 4004-009-175

Charged to: Benitez Marchandising

Delivered to: 582 Kamagog St. Makati City

100 box Plain pencil- mongol 50
150 box thumbtacks - golden P 58.
300 bottle Elemer's glue 35
150 box Carbon paper - blackie 145
240 box Typewriter Ribbon - Roll-o 30
300 pair scissors 17.
1,500 piece thick notebook 47
1,000 piece thin notebook 40
2,500 piece Bic ballpen - black 12.
2,500 piece Bic ballpen - blue 12.
2,500 piece Bic Ballpen - red 12.
1,000 piece Fastener 1.5
1,500 pads Intermediate Pad - old mill 22
150 bottle Ink - Quink 82
TOTA
Received by:
and cost of collection, the parties expressly submit themselves to the jurisdiction of the Courts of the City of
Manila in any legal action arising out of this transaction. Without in any way attempting to divert on any other
Grac CORPORATION
INVOIC
e VAT 2011-002-148 | TIN 4004-009-175

Charged to: Ida Coronel

Delivered to: 63 Manotoc, St., QC

50 piece Fountain pen - pilot P 150
20 box thumbtacks - golden 58.
20 box paper clips - silver 50
150 roll cartolina 12.
300 pad 16 column worksheet - vernal 72.
TOTA
Received by:
Grac CORPORATION
INVOIC
e VAT 2011-002-148 | TIN 4004-009-175

Charged to: Luli Samson

Delivered to: 852 Buendia Ave., Makati City

250 pads Intermediate pad- old mill 22
450 pads yelloe paper - old mill P 43.
100 ream onion skin - milky 159.
100 ream bond paper - whitey 188.
300 piece thick notebook 47
300 piece thin notebook 40
TOTA
Received by:
Grac CORPORATION
INVOIC
e
VAT 2011-002-148 | TIN 4004-009-175
Charged to: susan de Leon

Delivered to: 482 Rizal Ave., MM

1,500 pads intermediate pad - old mill 22
1,250 pads yellow paper - old mill P 43.
1,300 meter plastic cover 25
450 roll cartolina 12.
250 piece folder - regular 4
250 piece folder - long 5
300 piece Leaf notebook - thick 47
300 piece bind notebook - thin 40
500 piece fastener 1.5
150 pair scissors 7.5
200 ream art paper 210
150 bottle Elmer's glue 35
TOTA
Received by:
Grac CORPORATION
INVOIC
e VAT 2011-002-148 | TIN 4004-009-175

Charged to: Building blocks, inc

Delivered to: 220 Ortigas, Mandaluyong
240 box Plain Pencil - Mongol
120 box Charcoal Pencil - Staedler
30 box Silver - Paper Clips
20 box Golden Thumbtacks
40 box Blackie Carbon Paper
60 box Roll-O Typewriter Ribbon
250 piece Bic Ballpen - Black
250 piece Bic Ballpen - Blue
150 piece Bic Ballpen - Red
600 piece Folder - Long
600 piece Folder - Regular
80 piece Pilot Fountain Pen
TOTA
Received by:
Grac CORPORATION
INVOIC
e VAT 2011-002-148 | TIN 4004-009-175

Grac
e Website: www.gracecorporation.biz.ph
Charged to: building blocks, inc.

Delivered to: 220 Ortigas, Mandaluyong

1200 piece Fastener
150 bottle Quink Ink
60 bottle Elmer's Glue
200 ream Bond Paper - Whitey
360 ream Onion Skin - Milky
TOTA
Received by:
Grac
Grac CORPORATION
INVOIC
e VAT 2011-002-148 | TIN 4004-009-175

Charged to: Cora Tayag

Delivered to: 1642 Reyes Avenue, Manila

50 box Plain Pencil - Mongol
100 box Charcoal Pencil - Staedler
50 box Silver - Paper Clips
50 box Golden Thumbtacks
500 pad Intermediate Pad - Old Mill
500 pad Yellow Paper - Old Mill
250 roll Cartolina
120 bottle Elmer's Glue
500 pad 10 Column Worksheet - Vernal
TOTA
and cost of collection, the parties expressly submit themselves to the jurisdiction of the Courts of the City of
Manila in any legal action arising out of this transaction. Without in any way attempting to divert on any other
Received by:
Grac CORPORATION
INVOIC
e VAT 2011-002-148 | TIN 4004-009-175

Charged to: Cora Tayag

Delivered to: 1642 Reyes Avenue, Manila

750 piece Bic Ballpen - Black 12.
750 piece Bic Ballpen - Blue 12.
450 piece Thick Notebook 47
800 piece Thin Notebook 40
TOTA
Received by:
Grac CORPORATION
INVOIC
e VAT 2011-002-148 | TIN 4004-009-175

Charged to: Centeno, Antonio and Tantoo, CPAs

Delivered to: 296 Frisco St., Novaliches

1,500 pad 10-Column Worksheet - Vernal P 72.
1,250 pad 12 column worksheet - vernal 72.
2,000 pad 14 column worksheet - vernal 72.
1,250 pad 16 column worksheet - vernel 72.
100 box Typewriter ribbon 30
500 box Plain pencil- Mongol 101.
250 box Charcoal pencil- Staedler 130.
1,250 piece Bic ballpen- Black 12.
1,250 piece Bic Ballpen- Blue 12.
750 piece Bic Ballpen- Red 12.
1,200 pad Yellow paper - Old Mill 43.
600 ream Bond Paper - Whitey 188.
60 box Carbon Paper - Blackie 145
TOTA
Received by:
Grac CORPORATION
INVOIC
e VAT 2011-002-148 | TIN 4004-009-175

Charged to: Eagle Contractors

Delivered to: 11 Forbes St., Makati City
500 box Charcoal Pencil - Staedler P 130

300 ream Bond Paper- Whitey 188.
1,500 piece Bic Ballpen - Black 12.
1,500 piece Bic Ballpen - Blue 12.
TOTA
Received by:
Grac CORPORATION
INVOIC
e VAT 2011-002-148 | TIN 4004-009-175

Charged to: Dynasty Construction

Delivered to: 30 Rizal Ave., Sta. Cruz, Manila
1,600 bottle elmer's glue P 35.

1,200 box Typewriter Ribbon- Roll-O 30
500 realm Bond Paper- Whitey 188.
TOTA
Received by:
Grac CORPORATION
INVOIC
e
Grac
e VAT 2011-002-148 | TIN 4004-009-175
Charged to: Benitez Merchandising

1,000 pad Yellow Paper- Old Mill P 43.

1,000 ream Bond Paper - Whitey 188.
TOTA
Received by:
Grac CORPORATION
INVOIC
e
VAT 2011-002-148 | TIN 4004-009-175
Charged to: Benitez Marketing


2,500 piece Bic Ballpen - black 12.
3,000 piece Bic Ballpen - blue 12.
2,000 piece Bic Ballpen -red 12.
TOTA
Received by:
Grac CORPORATION
INVOIC
e
VAT 2011-002-148 | TIN 4004-009-175
Charged to: Luli Samson

Delivered to: 852 Buendia Ave., Makati City

250 pad yellow paper - old mill 43.
100 ream bond paper - whitey 188.
TOTA
Received by:
E1.2
INVOICE No. 1251
Date 1 December 2011
Delivery Receipt No. 304
Job Order No.
P. O. No.
Terms 2/10, n/30
Unit Price Amount
P 101.50 P 126,875.00
130.5 32,625.00
50 500
145 2,900.00
188.5 28,275.00
159.5 31,900.00
12.5 9,375.00
12.5 9,375.00
12.5 5,000.00
TOTAL P 246,825.00
All merchandise covered by this invoice has been inspected,

verified and checked.
Received by:
Customer/Receiver
INVOICE No. 1252
Job Order No.
P. O. No.
Terms 2/10, n/30
Unit Price Amount
P 1.50 P 525.00
4 1,400.00
35 2,100.00
30 600
TOTAL P 4,625.00

Received by:
Customer/Receiver
INVOICE No. 1253
Job Order No.
P. O. No.
Terms 2/10, n/30
Unit Price Amount

P 82.50 P 5,775.00
150 10,500.00
188.5 18,850.00
145 2,900.00
159.5 12,760.00
72.5 3,625.00
72.5 3,625.00
TOTAL P 58,035.00

Received by:
Customer/Receiver
INVOICE No. 1254

Job Order No.
P. O. No.
Terms 2/10, n/30
Unit Price Amount
P 101.50 P 81,200.00
130.5 91,350.00
72.5 36,250.00
72.5 36,250.00
72.5 36,250.00
72.5 36,250.00
43.5 65,250.00
188.5 94,250.00
159.5 111,650.00
12.5 3,750.00
25 62,500.00
210 52,500.00
4 2,000.00
5 2,500.00
TOTAL P 711,950.00

Received by:
Customer/Receiver
INVOICE No. 1255
Job Order No.
P. O. No.
Terms 2/10, n/30
Unit Price Amount

50 5,000.00
P 58.00 8,700.00
35 10,500.00
145 21,750.00
30 7,200.00
17.5 5,250.00
47 70,500.00
40 40,000.00
12.5 31,250.00
12.5 31,250.00
12.5 31,250.00
1.5 1,500.00
22 33,000.00
82 12,300.00
TOTAL P 309,450.00

Received by:
Customer/Receiver
INVOICE No. 1256
Job Order No.
P. O. No.
Terms 2/10, n/30
Unit Price Amount

17.5 3,500.00
P 150.00 7,500.00
58.5 1,170.00
50 1,000.00
12.5 1,875.00
72.5 21,750.00
72.5 36,250.00
72.5 29,000.00
72.5 36,250.00
TOTAL P 138,295.00

Received by:
Customer/Receiver
INVOICE No. 1257
Job Order No.
P. O. No.
Terms 2/10, n/30
Unit Price Amount

22 5,500.00
P 43.50 19,575.00
159.5 15,950.00
188.5 18,850.00
17.5 875
47 14,100.00
40 12,000.00
TOTAL P 86,850.00

Received by:
Customer/Receiver
INVOICE No. 1258
Job Order No.
P. O. No.
Terms 2/10, n/30
Unit Price Amount

22 33,000.00
P 43.50 54,375.00
25 32,500.00
12.5 5,625.00
4 1,000.00
5 1,250.00
47 14,100.00
40 12,000.00
1.5 750
7.5 1,125.00
210 42,000.00
35 5,250.00
TOTAL P 202,975.00

Received by:
Customer/Receiver
INVOICE No. 1259
Job Order No.
P. O. No.
Terms cash
Unit Price Amount
101.5 24360
130.5 15660
50 1500
58 1160
145 5800
30 1800
12.5 3125
12.5 3125
12.5 1875
5 3000
4 2400
150 12000
TOTAL P 75,805.00

Received by:
Customer/Receiver
INVOICE No. 1260

Job Order No.
P. O. No.
Terms cash
Unit Price Amount

1.5 1,800.00
82.5 12,375.00
35 2,100.00
188.5 37,700.00
159.5 57,420.00
TOTAL P 111,395.00

Received by:
Customer/Receiver
INVOICE No. 1261
Job Order No.
P. O. No.
Terms 2/10 n/30
Unit Price Amount

101.5 5,075.00
P 130.50 13,050.00
50 2,500.00
58 2,900.00
22 11,000.00
43.5 21,750.00
12.5 3,125.00
35 4,200.00
72.5 36,250.00
72.5 36,250.00
72.5 36,250.00
72.5 36,250.00
TOTAL P 208,600.00

Received by:
Customer/Receiver
INVOICE No. 1262
Job Order No.
P. O. No.
Terms 2/10 n/30
Unit Price Amount

12.5 9,375.00
12.5 9,375.00
12.5 9,375.00
47 21,150.00
40 32,000.00
TOTAL P 81,275.00

Received by:
Customer/Receiver
INVOICE No. 1263
Job Order No.
P. O. No.
Terms cash
Unit Price Amount

P 72.50 P 108,750.00
72.5 90,625.00
72.5 145,000.00
72.5 90,625.00
30 3,000.00
101.5 50,750.00
130.5 32,625.00
12.5 15,625.00
12.5 15,625.00
12.5 9,375.00
43.5 52,200.00
188.5 113,100.00
145 8,700.00
TOTAL P 736,000.00

Received by:
Customer/Receiver
INVOICE No. 1264
Job Order No.
P. O. No.
Terms 2/10, n/30
Unit Price Amount
P 130.50 P 65,250.00
188.5 56,550.00
12.5 18,750.00
12.5 18,750.00
12.5 6,250.00
TOTAL P 165,550.00

Received by:
Customer/Receiver
INVOICE No. 1265
Job Order No.
P. O. No.
Terms cash
Unit Price Amount
P 35.00 P 56,000.00
30 36,000.00
188.5 94,250.00
--------------
TOTAL P 186,250.00

Received by:
Customer/Receiver
INVOICE No. 1266

Job Order No.
P. O. No.
Terms 2/10, n/30
Unit Price Amount
P 43.50 P 43,500.00
188.5 188,500.00
-------------
TOTAL P 232,000.00

Received by:
Customer/Receiver
INVOICE No. 1267
Date 3 January 2012
Job Order No.
P. O. No.
Terms 2/10, n/30
Unit Price Amount

12.5 31,250.00
12.5 37,500.00
12.5 25,000.00
TOTAL P 93,750.00
Received by:
Customer/Receiver
INVOICE No. 1268
Date 3 January 2012
Job Order No.
P. O. No.
Terms 2/10, n/30
Unit Price Amount

43.5 10,875.00
188.5 18,850.00
TOTAL P 29,725.00

Received by:
Customer/Receiver
December
ACCOUNTS 31,2011
RECEIVABLE
CONFIRMATION
Audit Objectives
1.To determine that receivables exist as of the balance sheet date.
2.To verify the existence of the accounts receivables.
3. To determine that receivables stated in the balance sheet represent authentic obli
4. To verify whether balance of accounts of the debtors are accurate.
Assertions Affected
1. Existence
3. Valuation
Audit Procedures
1. Conduct sampling from list of customers to be confirmed.
2. Construct a confirmation letter.
3. Send confirmation letter to the clients.
4. Obtain replies of the confirmation letters from the clients.
5. Review clients’ accounts and compare it with the clients confirmation of their acco
6. Perform alternative procedures on accounts that do not respond to positive confirm
7. Vouch cash receipts after the confirmation date for subsequent payment.
8. Vouch sales invoices and shipping documents
9. Note for material differences.
Findings
The following are the AR Confirmation results:
No Reply: Not Included in Send Out of Confirmation:

1. Eagle Contractors 1. Lighthouse Commercial
2. Valera Comany 2. Solomon Enterpises
3. Legarda Company 3. Carlo Santos
4. Dynasty Construction 4. Chad Acosta
5. Benitez Merchandising5. Johann Morales
6. J.R. Alano 6. Luli Samson
Moreover, the AR Confirmation revealed that:

1. Louie Tan paid P484,000.00 on December 28, 2011 evidenced by OR#1
There is no PAJE to be recorded since it was already reflected in C2 PAJE #
2. Susan de Leon's account has been paid in full on December 31, 2011 e
There is no PAJE to be recorded since it was already reflected in C2 PAJE #
3. Rex Enterprises confirmed his account to be correct but not yet due.
4. J. R. Alano Trading confirmed its account to be P1,600,000.00, not P150
PAJE 1 Accounts Receivable JR Alano Trading

Accounts Receivable JR Alano
To remove the double recording of JR Alano Tradi
account
PAJE 2 Sales
Accounts Receivable JR Alano Trading
To adjust JR Alano Trading's account to the right
The accounts that have confirmed to be correct are:

1. Alberto & Associates CPA's
2.
3. Anna
GwendoReyes
Reyes
4. Building Blocks, Inc
5. Roces, Adriano and Salas, CPAs
6. R.V. Castro & Co.
Conclusion
After going through with the AR confirmation letters sent to clients, it came to the att
some customers that are not included in the list of send out confirmation letters and
send back there replies. Thus, to confirm the existence, valuation and whether these
the company, the auditor did a vouching of the Sales Invoices, Sales Order, Cash Rec
Other than the proposed adjusting journal entries above there are no exceptions foun
confirmation results and the AR balance after the recognizing the PAJE)
Ser 31,2011
RECEIVABLE
RMATION
E2
present authentic obligations owed to the company.
firmation of their accounts.

ond to positive confirmation requests.
nt payment.
Confirmation:
1 evidenced by OR#118. His account balance should have been P800,000.00.
reflected in C2 PAJE #1.
December 31, 2011 evidenced by OR#122.

reflected in C2 PAJE #1.
ct but not yet due.

600,000.00, not P150,000.
###
1,600,000.00
ding of JR Alano Trading's
150,000.00
no Trading 150,000.00
account to the right balance
nts, it came to the attention of the auditors that there are

firmation letters and that some customers were not able to
on and whether these AR accounts are authentic obligations to
Sales Order, Cash Receipts Journal and Shipping Documents.
re no exceptions found. (See E2.1 for the summary of the AR
he PAJE)
Prepared by:Date:
SSM 1/20/2012
MRL 1/20/2012
Reviewed by:Date:
MKKRMA 1/24/2012
SUMMARY OF ACCOUNTS RE
Acct. Name of End Balance, Dec.
No. Customer 30
101 Rex Enterprises E1.1 1,700,000.00 a
102
Louie Tan E1.1 1,284,000.00 a
103
Eagle Contractors E1.1 300,000.00 a
104 Valera Company E1.1 - a
105 Ida Coronel E1.1 138,285.00 a
106 Alberto &

Associates, CPAs E1.1 150,000.00 a
107 Legarda Company E1.1 - a
108 Cora Tayag E1.1 289,875.00 a
Dynasty
109 Construction E1.1 50,000.00 a
112
Gwendo Reyes E1.1 - a
Benitez
113 Merchandising E1.1 138,250.00 a
Lighthouse
114 Commercial E1.1 186,500.00 a
115
Building Blocks, Inc.E1.1 575,000.00 a
117 Solomon EnterprisesE1.1 - a
118 Carlo Santos E1.1 264,000.00 a
119 Chad Acosta E1.1 - a
120 J.R. Alano E1.1 1,600,000.00 a
121 Susan de Leon E1.1 204,475.00 a
123 Roces, Adriano &
Salas, CPAs E1.1 1,700,000.00 a
124
R.V. Castro & Co. E1.1 1,224,500.00 a
125 Johann Morales E1.1 - a
126
Centeno, Antonio &
Tantoco, CPA E1.1 736,000.00 a
127 Luli Samson E1.1 - a
128 J.R. Alano Trading E1.1 150,000.00 a
TOTAL 10,690,885.00
Legend
a the balance are from E1.1 after agreement of the general ledger and subsidi
b there is a proposed PAJE for this crediting Gwendo Reyes AR account and deb
c these amounts
Compared are more
amounts withthan
E 1B10% of the Accounts
Adjustments Receivable
of Customer Balance.
Balances Henc
to check i
both findings provide the same amounts and entries noted here are already
d
RY OF ACCOUNTS RECEIVABLE CONFIRMATION RESULTS
Confirmation Balances
PAJE
Result Confirmed
Balance is Ok but
not yet due 1,700,000.00
484,000 has been
paid per OR#118 (484,000.00) 800,000.00
NO REPLY
NO REPLY
returned by the
post office
Ok
150,000.00
NO REPLY
Returned by the
post office
NO REPLY
Balance Ok
(50,000.00) b
NO REPLY
Not Included in
Send Out of
Confirmation
Balance Correct
575,000.00
Not Included in
Send Out of
Not Included in
Confirmation
Send Out of
Not Included in
Confirmation
Send Out of
Confirmation
NO REPLY (1,600,000.00)
paid in full on Dec.
31, 2011 per OR (204,475.00) -
#122
This is Correct.
1,700,000.00
Balance is Correct
1,224,500.00
Not Included in
Send Out of -
Confirmation
Balance not
Correct. It should be
736,000
736,000.00
Not Included in
Send Out of -
Ok. (balance
Confirmation
confirmed 1,450,000.00 1,600,000.00
1,600,000.00)
(838,475.00) 8,435,500.00
ent of the general ledger and subsidiary ledgers and after posting necessary adjustments to reflect the
g Gwendo Reyes AR account and debiting an advances from customer account in the amount of P50,0
e Accounts
ents Receivable
of Customer Balance.
Balances Hence,
to check these entities
if findingsof are major
the previous customers
procedure areofcomparable
Grace Corporation.
with these fin
s and entries noted here are already noted and made on the first procedure. The balances obtained fr
adjsuted amounts of the Subsidiary Ledger.
NFIRMATION RESULTS
Balances Not Balances after Adjusted
d
Confirmed Vouching Balance
1,700,000.00
800,000.00
300,000.00 300,000.00 300,000.00
- - -
138,285.00 138,285.00 138,285.00
150,000.00
289,875.00 289,875.00 289,875.00
50,000.00 50,000.00 50,000.00
138,250.00 138,250.00 138,250.00
186,500.00 186,500.00 186,500.00
575,000.00
- - -
264,000.00 264,000.00 264,000.00
- - -
1,600,000.00 - -
-
1,700,000.00
1,224,500.00
- -
736,000.00
- -
1,600,000.00
2,966,910.00 1,366,910.00 9,852,410.00
ing necessary adjustments to reflect the correct AR balance.

ustomer account in the amount of P50,000.
or customers
procedure areofcomparable
Grace Corporation.
with these findings (i.e. no gross discrepancies). It was found out that
rst procedure. The balances obtained from the Confirmation procedure prove the reliability of the
e Subsidiary Ledger.
E2A
% Notes
17.25% c
8.12%
No
exceptions
3.04% noted
No
0.00% exceptions
No
noted
1.40% exceptions
noted
1.52%
No
exceptions
No
noted
2.94% exceptions
No
noted
0.51% exceptions
noted
No
1.40% exceptions
No
noted
1.89% exceptions
noted
5.84%
No
2.68% exceptions
noted
Error in
Recording
17.25% c
12.43% c
7.47%
16.24% c
100.00%
es). It was found out that

prove the reliability of the
December 31,2011
SALES CUT-OFF
Audit Objectives
1. To determine if all balances of sales and accounts receivable transactions are recor
Assertions Affected
1. Completeness
Audit Procedures
1. Obtain and examine sales invoices 15 days before and after year-end.
2. Trace invoices to the sales & accounts receivable records from the ledgers.
3. Check whether it is appropriately recorded as either cash or credit sales.
Findings
1) Sales Invoice # 1264 was not recorded. This pertains to merchandise made to Eagle
After performing
with terms theDelivery
Casn on sales cut-off, the following
on December are noted:
30, 2011. The sales invoice recorded sales a
165, 550.
There is no PAJE to be recorded since it was already reflected in C2 PAJE #1.

2) Sales Invoices # 1265 and 1267 was not recorded. This pertains to items ordered by
Corporation and Benitez Merchandising billed with terms Cash on Delivery, amounting
P280,000. The items are recorded in their respective sales invoices but not delivered.
3)
After
Sales
PAJE performing
to Invoices
be the
# 1266
recorded Sales
sinceand
itCut-Off
1268
was procedure,
was not
already recorded.
it came
reflected in C2This
toPAJE
the
pertains
attention
#1. to items
of theordered
auditorsby
t
Merchandising
sales not recorded
and Luli
within
Samson
the year-end
under credit
period.
terms
Thus2/10,
to confirm
n/30. Items
whether
ordered
all sales
are recor
trans
respective
exist within sales
this year
invoices
are recorded,
but not delivered.
the auditors examined the sales invoices
There is no PAJE to be recorded since it was already reflected in E1 PAJE #2. whose da
15 days before and after December 31 and determined whether or not the sales transa
be included in this year's sales. Other than the proposed adusting entries, there were n
Conclusion
exceptions noted. (See E 3A Sales Cut-off Schedule for the summary of the results obt
for the proposed adjustments on the sales book journal.)
Prepared by:
MKKRMA
RAC
Reviewed by:
AKRC
E3
nsactions are recorded in the proper period.
e ledgers.
dise made to Eagle Contractors

ce recorded sales amounting to P
to items ordered by Dynasty

elivery, amounting to a total of
but not delivered. There is no
on
to items
of theordered
auditorsby
that
Benitez
there were
ether
s ordered
all sales
are recorded
transactions
in their
that
invoices whose dates are within
not the sales transaction should
ntries, there were no further
y of the results obtained and E3B
Prepared by: Date:

1/21/2012
1/21/2012
Reviewed by: Date:

1/24/2012
SALES CUTOFF SCHEDULE
Sales
Invoice Date Client Amount Terms
No.
2/10,
1256 ### Ida Coronel 138, 295
n/30
2/10,
1257 ### Luli Samson 86,850
n/30
2/10,
1258 ### Susan de Leon 204,475
n/30
1259 ### Building Blocks, Inc. 75,805 Cash
1260 ### Building Blocks, Inc. 111,395 Cash
2/10,
1261 ### Cora Tayag 208,600
n/30
2/10,
1262 ### Cora Tayag 81,275
n/30
1263 ### Centenio, Antonio & Tantoco, CPAs 736,000 Cash
1264 ### Eagle Contractors 165,550 C.O.D.
1265 ### Dynasty Corporation 186,250 C.O.D.
2/10,
1266 ### Benitez Merchandising 232,000
n/30
1267 1/3/2012 Benitez Merchandising 93,750 C.O.D.
2/10,
1268 1/3/2012 Luli Samson 29,755
n/30
DULE
Is it
E3A
included in Are
Should it be
Unadjusted sales
included in
Dec. 31, already Remarks
AR, Dec 31,
2011, recorded
2011?
Accounts ? No exceptions
YES
Receivable? YES YES
noted.
No exceptions
YES YES YES
noted.
No exceptions
YES YES YES
noted.
No exceptions
NO YES NO
noted.
No exceptions
NO YES NO
noted.
No exceptions
YES YES YES
noted.
No exceptions
YES YES YES
Thisnoted.
should be
YES YES NO part
recorded of as
This shouldcash
cash
be
NO NO NO salessales
since it
recorded as cash is
NO NO NO within
sales the
sincecut-off
Credit sales itare
is
period.
within
NO NO YES within the
the cut-off
cut-off
period.
No exceptions
period
NO NO NO
noted.
No exceptions
NO NO NO
noted.
SALES BOOK
DEBIT
INV. CREDIT
DATE SOLD TO TERMS F
NO. ACCOUNTS CASH SALES
RECEIVABLE SALES
2011
Dec. 1 Eagle Contractors 2/10, n/30 1251 246,825.00 224,386.00
Dynasty
3 2/10, n/30 1252 4,625.00 4,205.00
Construction
7 Sampollo Company 2/10, n/30 1253 58,035.00 52,759.00
Benitez
10 2/10, n/30 1254 711,950.00 647,227.00
Merchandising
1255 309,525.00 281,386.00
15 Ida Coronel 2/10, n/30 1256 138,285.00 125,714.00
17 Luli Samson 2/10. n/30 1257 86,850.00 78,955.00
22 Susan de Leon 2/10, n/30 1258 204,475.00 185,886.00
23 Building Blocks, Inc. Cash 1259 75,805.00 68,914.00
Building Blocks, Inc. 1260 111,395.00 101,268.00
27 Cora Tayag 2/10, n/30 1261 208,600.00 189,636.00

1262 81,275.00 73,886.00
Centeno, Antonio &

29 2/10. n/30 1263 736,000.00 669,091.00
Tantoco
### ### ###
(104) (3001)
ADJUSTMENTS:
30 Eagle Contractors C.O.D. 1264 165,550.00 150,500.00
30 Dynasty Corporation C.O.D. 1265 186,250.00 169,318.00
Benitez
30 Merchandising 2/10,n/30 1266 232,000.00 210,909.00
TOTAL 3,018,445.00 ### ###
E3.1
CREDIT
OUTPUT TAX
22,439.00
420
5,276.00
64,723.00
28,139.00
12,571.00
7,895.00
18,589.00
6,891.00
10,127.00
18,964.00
7,389.00
66,909.00
270,332.00
(1008)
15,050.00
16,932.00
21,091.00
323,404.00
December 31,2011
REVIEW COMPUTATION FOR ALLO
OF BAD DEBTS
Audit Objectives
1. To determine estimated possible credit losses
2. To determine the adjusted balance of the bad debts.
3. To determine whether balance of accounts of the debtors are accurate.
4. To be able to calculate the necessary provision to be recognize for the year.
Assertions Affected
1. Valuation and Allocation
Audit Procedures
1. Obtain the general ledger of Grace Corporation.
2. Obtain a schedule of aged accounts receivable from Grace Corporation.
3. Trace accounts to the ledgers and reconcile it.
4. Inquire how Grace Corporation computes for their allowance for bad debts.
5. Obtain adjusted balance of the Accounts Receivable.
6. Vouch a sample of current amounts in the aged trial balance to sales invoices to de
7. Vouch cash receipts after the balance sheet date for collections on past-due accoun
8. Examine the computation for allowance for bad debts.
9. Review the footings, cross-footings and aging of accounts especially those classifie
shown as past due.
10. Recalculate the allowance for bad debts using the agreed percentage of bad debt
11. Analyze if percentage of uncollectibility applied reflects the best estimate.
Findings
Adjusted Balance of Allowance for Bad Debts

Less: Unadjusted Balance of Allowance for bad debts
Provision for Allowance of Bad Debts
Computation for Required Allowance

Adjusted Balance of Accounts Receivable
Multiply by:
Adjusted Balance of Allowance for Bad Debts
PAJE 1 Allowance for bad debts

Bad Debts Expense
To record an allowance for bad debts.
Legend
a Adusted Balance of Allowance for Bad Debts.
b From General Ledger Account No. 104-A
c Agreed percentage between Grace Corp. and the audit team.
Conclusion
In congruence to the past three procedures, it has come to the audiitor's attention tha
Bad Debts is based on adjusted balances, then, there may be a possibility of misstate
Debts. Thus to determine that Allowance for Bad Debts has been accurately recorded
Allowance for Bad Debts by multiplying the adjusted balance of accounts receivable b
Allowance for Bad Debts should be P 492,620.50 causing a readjustment of P 5,190.50
entry noted above, there were no further exceptions noted.
December 31,2011
VIEW COMPUTATION FOR ALLOWANCE
OF BAD DEBTS E4
e debtors are accurate.

o be recognize for the year.
om Grace Corporation.
r allowance for bad debts.
trial balance to sales invoices to determine whether amounts aged current should be aged past due
e for collections on past-due accounts.
accounts especially those classified as current as well as those
he agreed percentage of bad debts of Grace Corporation and the auditor.

reflects the best estimate.
Debts 492,620.50 a
or bad debts 497,811.00 b
s 5,190.50
vable 9,852,410.00
5% c
Bad Debts 492,620.50
5,190.50
5,190.50
ebts.
. and the audit team.
come to the audiitor's attention that since the given Allowance for
re may be a possibility of misstatement of Allowance for Bad
ebts has been accurately recorded, the auditors recomputed the
d balance of accounts receivable by 5%. As noted above, the
using a readjustment of P 5,190.50. Other than the adjusting
s noted.
Prepared bDate:
MKKRMA 1/25/2012
SPR 1/25/2012
Reviewed bDate:
RAC 1/26/2012
uld be aged past due
December 31,2011
INSPECTION OF NOTES RECEIVAB
Audit Objectives
1. To determine whether amounts of notes receivables are accurate
2. To determine that notes receivables exist as of the balance sheet date.
3. To determine that accrued interest receivables exist as of the balance sheet date.
4. To determine whether all accrued interest receivables were recorded properly.
5. To determine whether amounts of accrued interest receivable were accurate.
Assertions Affected
Audit Procedures
1. Obtain a copy of contract for notes receivables
2. Review terms of the note.
3. Confirm valuation from debtor.
4. Recalculate interest income and trace to the income account
5. Determine the amount of accrued interest for the period.
6. Note for differences.
Findings
Annu
Outstandin Outstanding
al
Maker g
Rate From
Balance
Alicia M. Dav E5.1 2,500,000 24% 5-Nov-11
E5.1 (500,000)
E5.1 2,000,000 24% 29-Dec
Johann Mora E5.1 470,000 24% 8-Dec-11
TOTAL E5.1 2,470,000
Recognized Interest Recevable at December 2011
DIFFERENCE
1) The proceeds from notes receivable was already recorded in the audit of c
to be recorded since it was already reflected in C2 PAJE #4.
2) The accrued interest receivable is understated. Thus the proposed adjustin
PAJE 1 Accrued Interest Receivable 59,652.21
Interest Income
No valuation confirmation was sent
To record to theinterest
accrued debtor.income.
Nevertheless, the accuracy of the n
ascertained by examining the terms of its corresponding promissorry notes. The outst
Receivable
Conclusionis overstated by P500,000 in the trial balance because the PCIBank ccredit
reflected in the balance. It should be adjusted to P2,470,000. The recognized Accrued
balance at December 31, 2011 is understated by P59,625. The difference in computat
deduction on the principal amount. The breakdown in the computation of the adjusted
shown on the findings. Henceforth, the adjusted Accrued Interest Receivable on Dece
No additional exceptions were noted.
er 31,2011
OTES RECEIVABLES E5
balance sheet date.

corded properly.
were accurate.
Outstanding Days
Accrued
Outstand
To Interest
ing
29-Dec-11 54 88,767
31-Dec 2 2,630
31-Dec-11 23 7,108
98,505
38,853
59,652
ded in the audit of cash. Thus, there is no PAJE

#4.
he proposed adjusting entry is as follows:
59,652.21
he accuracy of the notes receivable can be
orry notes. The outstanding balance of Notes
e the PCIBank ccredit memo was not yet
e recognized Accrued Interest Receivable
fference in computation was due to the
ation of the adjusted interest receivable is
ReceivablePrepared by: 31,
on December Date:
2011 is P98,505.
CDS 1/27/2012
AKRC 1/27/2012
Reviewed by: Date:

SSM 1/28/2012
Schedule of Notes Receivable E5A
Date of Annual Bank Outstandi
Face
Maker Maturi Interest Collectio ng
Note Amount
ty Rate n Balance
Alicia M. David 5-Nov-11 ### 24% 2,500,000 500,000 2,000,000
Johann Morales 8-Dec-11 ### 24% 470,000 - 470,000
TOTAL 2,970,000 500,000 ###
PROMISSORY NOTES
PROMISSORY NOTE
(Note Payable- Officer)
P 1,700,000.00
For value received, I / we jointly and severally promise to pay,

Grace Corporation or order, the sum of One million seven hundre
thousand pesos (P 1,700,000.00 ), Philippine Currency at a
interest rate of none % payable at 12 Ninoy Aquino Ave., Paranaque Ci
If this note is placed in the hands of attorney for collection; the makes and endorsers s
addition, pay 25% of the amount due as attorney's fees and costs of collection (aside from the c
litigation allowed by the Rules of Court).
Signature Signature
Alfredo P. Cacho Sarah B. Tuason

for Grace Corporat
Name in Print Name in Print
12 Ninoy Aquino Ave

58 Rizal Avenue, Manila Paranaque City
Mailing Address Mailing Address
Res. Cert. No.: AB582485 Res. Cert. No.: AB348678

Date: January 30, 2011 Date: January 19, 2011
Place of Issue: Manila Place of Issue: Paranaqu
SIGNED IN THE PRESENCE OF: SIGNED IN THE PRESENCE O

PROMISSORY NOTE
(Note Receivable)
P 470,000.00

Grace Corporation or order, the sum of Four hundred seventy thousand
thousand pesos (P 470,000.00 ), Philippine Currency at a
interest rate of 24 % payable at 12 Ninoy Aquino Ave., Paranaque Ci
Signature Signature
Sarah B. Tuason
for Grace Corporation Johann Morales
12 Ninoy Aquino Avenue 301 Frico Street

Paranaque City Novaliches, Quezon
Res. Cert. No.: AB3486789 Res. Cert. No.: A4882283

Place of Issue: Paranaque City Place of Issue: Quezon C
PROMISSORY NOTE
(Note Payable)
P 1,906,500.00

Genius Paper Products or order, the sum of One million nine hundred six
thousand five hundred pesos (P 1,906,500.00 ), Philippine Currency at a
interest rate of 24 % payable at 565 Solana Avenue, Pasay City
Signature Signature
Felicisomo Rey Sarah B. Tuason

for Genius Paper Products for Grace Corporat
565 Solana Avenue 12 Ninoy Aquino Ave

Pasay City Paranaque City

Place of Issue: Pasay City Place of Issue: Paranaqu
PROMISSORY NOTE
(Note Receivable)
P 2,500,000.00

Grace Corporation or order, the sum of Two million five hundred
interest rate of 24 % payable at 12 Ninoy Aquino Ave., Paranaque Ci
Signature Signature
Sarah B. Tuason Alicia M David

for Grace Corporation
12 Ninoy Aquino Avenue 58 Veronica Stree

Paranaque City Sta. Mesa, Manil
Res. Cert. No.: AB3486789 Res. Cert. No.: 5982283

Place of Issue: Paranaque City Place of Issue: Manila
PROMISSORY NOTE
(Note Payable)
P 1,600,000.00

Genius Paper Products or order, the sum of One million six hundred
interest rate of 27 % payable at 565 Solana Avenue, Pasay City
Signature Signature
Felicisomo Rey Sarah B. Tuason

for Genius Paper Products for Grace Corporat
565 Solana Avenue 12 Ninoy Aquino Ave

Pasay City Paranaque City

Place of Issue: Pasay City Place of Issue: Paranaqu

TES E5.1
)
October 1, 2011
360 days after date

ne million seven hundred
Philippine Currency at an annual
uino Ave., Paranaque City .
ion; the makes and endorsers shall, in

s of collection (aside from the costs of
Signature
Sarah B. Tuason
Name in Print
12 Ninoy Aquino Avenue

Paranaque City
Mailing Address
es. Cert. No.: AB3486789

ate: January 19, 2011
lace of Issue: Paranaque City
IGNED IN THE PRESENCE OF:

December 8, 2011
sixty days after date

undred seventy thousand

Signature
Johann Morales
Name in Print
301 Frico Street

Novaliches, Quezon City
Mailing Address
es. Cert. No.: A4882283

lace of Issue: Quezon City

December 1, 2011
ninety days after date

llion nine hundred six
ana Avenue, Pasay City .

Signature
Sarah B. Tuason
Name in Print

Paranaque City
Mailing Address

December 5, 2011
120 days after date

llion five hundred

Signature
Alicia M David
Name in Print
58 Veronica Street
Sta. Mesa, Manila
Mailing Address
es. Cert. No.: 5982283

lace of Issue: Manila
December 5, 2011
150 days after date

llion six hundred
ana Avenue, Pasay City .

Signature
Sarah B. Tuason
Name in Print

Paranaque City
Mailing Address


December 31,2011
REVIEW OF OTHER IMPORTANT
MATTERS
Audit Objectives
1. To determine that receivables stated in the balance sheet represent authentic
obligations owed to the company.
2. To verify the existence of the accounts receivables pledged or assigned, etc.
Assertions Affected
Audit Procedures
Upon inquiry
1. Inquire andany
about inspection
contractofinvolving
relevantreceivable
documentsfinancing,
and contracts providedassigning.
i.e. pledging, by the
management, it was found out that Grace Corporation had no pledged and assigned
2. Check if there are any receivables from related parties, i.e. subsidiaries, major custom
receivables. It also had no receivables from related parties (subsidiaries, associates, and
major customers). However it is noted that Grace Corporation has a receivable of
Findings
P300,000.00 from Anna Reyes, an employee.
Conclusion
Prepared by:
CDS
AKRC
Reviewed by:
MRL
E6
present authentic
r assigned, etc.
ts providedassigning.
pledging, by the
ledged and assigned
ubsidiaries, major customers.
sidiaries, associates, and
as a receivable of
Date:
1/28/2012
1/28/2012
Date:
1/29/2012
December 31,2011
Audit Procedures
1. Compare account balances in accounts, loans and notes receivable with the preced
in amounts or deviations from trends.
2. Investigate large and/or unusual balance classified as other accounts receivable.
3. Compute and compare ratios to prior year to evaluate valuation assertion
Findings
WP
ACCOUNT TITLE BALANCE 2010
Ref
Accounts Receivable E1 5,850,000.00
Accounts Receivable - Others 6,400,000.00
Notes Receivable E5 1,500,000.00
Accrued Interest Receivable E5 0
Dividends Receivable
Total 13,750,000.00
Conclusion
1. There was an 60% increase in the accounts receivable of Grace Corporation. This w
balances of Grace corp for the years 2010 and 2011. Moreover, there were no indicati
assigned, or factored as the bank only confirmed land as collateral for a loan (see C3.
2. There are two notes receivables are dated November 5, 2011 and December 8, 201
recognized last year was collected and may be a factor for the increase in cash as sho
The Allowance
C2.1 for Bad Debts
Bank Confirmation. account
Moreover, Theper aging rate
interest of AR is both
for 492, notes
620.50. No Allowance
is 24% fo
and the tot
debts expense account was established.
was recognized during the year and a total of P59, 652 is to be recognized as adjustm
4. Total Accounts Receivable as of 2011 has decreased in comparison to last year's Ac
3. Account No. 111 - Anna Reyes (employee) was reclassified to Receivable from Emp
that Accounts Receivable - Others has decreased because of substantial payments fro
others in the amount of P 300 000.
Receivable - Others has decreased, Accounts Receivable relating to trade have increa
December 31,2011
ANALYTICAL PROCEDURES E7
d notes receivable with the preceding year or years. Investigate significant changes
ed as other accounts receivable.

luate valuation assertion
ADJUSTED % per Year Over Total

DIFFERENCE % CHANGE
BALANCE 2011 2010 2011
9,359,789.50 3,509,789.50 60.00% 42.55% 76.52%
303,600.00 -6,096,400.00 -95% 46.55% 2.45%
2,470,000.00 970,000.00 64.67% 10.91% 20.20%
98,505.00 98,505.00 N/A 0.81%
12,231,894.50 -1,521,705.50 -11.07% 100.00% 100.00%
vable of Grace Corporation. This was due to an increase sales as reflected in the trial
1. Moreover, there were no indications that the Accounts Receivables were pledged,
nd as collateral for a loan (see C3.1 bank confirmation for further reference)
Amount owed Percentages

1,700,000.00 17.25%
1,700,000.00 17.25%
1,224,500.00 12.43%
1,600,000.00 16.24%
mber 5, 2011 and December 8, 2011. Hence the 1,500,000 notes receivables
ctor for the increase in cash as shown in the C5 analytical procedure for cash and
ARfor
e is both
492, notes
620.50. No Allowance
is 24% for bad
and the total debtsreceivable
interest was recognized
is P 98,last year
505. but
Only a bad
P38,853
652 is to be recognized as adjustments.
sed in comparison to last year's Accounts Receivable. This may be due to the fact
eclassified to Receivable from Employees and reflected in the Accounts Receivable-
ecause of substantial payments from customers. However, even if Accounts
vable relating to trade have increased substantially this year.
Prepared by: Date:
MRL 1/29/2012
SPR 1/29/2012
Reviewed by: Date:

EAU 1/30/2012
LEAD
ACCOUNT BALANCE
ACCOUNT NAME WP REF.
NUMBER 2009
106 Merchandise Inventory F 700,000.00
TOTAL 700,000.00
December 31,2011
LEAD SCHEDULE - INVENTORY
BALANCE UNADJUSTED PAJE
2010 BALANCE 2011 Debit Credit
900,000.00 4,402,787.00 370,773.00 619,255.45
900,000.00 4,402,787.00 370,773.00 619,255.45
ORY
F
AUDITED
DIFFERENCE % CHANGE
BALANCE 2011
4,154,304.55 3,254,304.55 361.59%
4,154,304.55 3,254,304.55 361.59%
December 31,2011
AGREE GENERAL LEDGER WITH
SUBSIDIARY LEDGER
Audit Objectives
1.To determine whether the Inventory records agree with what is reflected in the book
2. To verify that the counted balance is carried forward into the company’s accounting
Assertions Affected
1. Presentation and Disclosure
2. Valuation / allocation
3. Completeness
Audit Procedures
1. Obtain list of inventory and reconcile to ledgers.
2. Observe the taking of physical inventory and conduct test counts,
3. Obtain final list of inventory based from the test counts during inventory observation
4. Review cut-off of purchases and sales transaction
5. Review the computation and entries to cost of goods sold.
6. Perform analytical review related to inventories and cost of goods sold.
7. Vouch an test inventory pricing.
8. Evaluate financial statement presentation and disclosure of merchandise inventory.
Findings
Beginning Balance GL 799,971.00

Purchases F1.1 ☂ 5,464,203.00
Cost of Goods Sold, per booksF1.2 1,861,387.00
Ending Balance, per books 4,402,787.00
Difference - Cost of Goods Sold 5,661.25
1. The Purchases balance agrees with the Purchase Book balance. However th
Adjusted Ending Balance F1.3 4,397,125.75
Cost of Goods Sold has a difference of 5,661.25 when the team recomputed CO
the quantity sold in the sales invoices and using the prices found in Physical In
The schedule provided in F1.3 shows the adjusted amounts computed. We pro
Adjusting Entry to acoount the difference found:
PAJE 1 Cost of Goods Sold ###

Merchandise Inventory 5,661.25
To adjust cost of goods sold.
Conclusion
The balance of ending inventory per General Ledger is not correct due to error in comp
Cost Of Goods Sold by 5,661.25 based on the Inventory Price List of Grace Corporation
found in the Sales Invoices for the period December 1-31, 2011. There were no other e
noted for the computation of Ending Inventory. Hence, we conclude that after the prop
entries, the Generel Ledger agrees with the Subsidiary Ledgers for Grace Corporation's
Legend
GL Traced from General Ledger
F1.1 Traced from Purchases Books
F1.3 Traced from Cost of Goods Sold
☂ Footed
eflected in the books and ledgers.
mpany’s accounting record
nventory observation
chandise inventory.
alance. However the amount of

eam recomputed COGS by using
found in Physical Inventory List.
s computed. We propose this
due to error in computating for the
f Grace Corporation and the items
here were no other exceptions
e that after the proposed adjusting
Grace Corporation's Inventory.
Prepared by: Date:

AKRC 2/1/2012
SPR 2/12012
Reviewed by: Date:

EAU 2/3/2012
PURCHASE BOOK
DATE PURCHASED FROM TERMS INV. NO. F
2011
Dec. 1 Arboleda Co., Inc. 2/10, n/30 101
2 Genius Paper Products P 300,000 down.
bal. 2/10, n/45 111
3 Sapphire Corporation 2/10, n/30 1082
6 Genius Paper Products 27% - 150 day note 127
7 Arboleda Co., Inc. n/30 107
10 Genius Paper Products 2/10, n/45 130
12 Sapphire Corporation n/30 1090
15 Genius Paper Products n/30 135
16 Arboleda Co., Inc. 2/10, n/45 117
20 Genius Paper Products 2/10, n/45 140 ▼
24 Arboleda Co., Inc. 1/10, n/20 127
26 Genius Paper Products P 2,500 down, bal. n/15 147
29 Arboleda Co., Inc. 1/10, n/15 130
E BOOK F1.1
MERCHANDISE
ACCOUNTS PAYABLE INPUT TAX DR.
INVENTORY Legend
413,750.00 376,136.00 37,614.00

- -
1,425,000.00 1,295,455.00 129,545.00
459,600.00 417,818.00 41,782.00
1,600,000.00 1,454,545.00 145,455.00
34,200.00 31,091.00 3,109.00
87,500.00 79,545.00 7,955.00
1,250,000.00 1,136,364.00 113,636.00
14,000.00 12,727.00 1,273.00
13,250.00 12,045.00 1,205.00
85,000.00 77,273.00 7,727.00
85,000.00 77,273.00 7,727.00
127,875.00 116,250.00 ○ 11,625.00 ○
5,000.00 4,545.00 455.00
130,000.00 118,182.00 11,818.00
12,250.00 ▼ 11,136.00 ○ 1,114.00 ○
25,750.00 ▼ 23,409.00 ○ 2,341.00 ○
45,000.00 40,909.00 4,091.00 ▼
13,325.00 12,114.00 1,211.00
165,000.00 150,000.00 15,000.00
19,125.00 17,386.00 1,739.00
6,010,625.00 5,464,203.00 ☂ F1 546,422.00 ☂
(1001) (106) (111)
Legend
127875/1.1 (VAT)
Replaced incorrect balance of 111,136. Amount based on 12,250/1.1 (VAT)

Replaced incorrect balance of 234,009. Amount based on 25,750/1.1 (VAT)
Traced from Purchase Invoice
Footed
PURCHASE INVOICES

951 Del Sol Avenue, Pasay City | VAT 2011-005-219 | TIN 4004-0070356
CHARGED TO: GRACE CORPORATION

ADDRESS: 12 Ninoy Aquino Avenue, Paranaque City
TERMS: bal 2/10, n/45 ORDER NO:
PARTICULARS
15,000 pads 16 column worksheet - Vernal

VAT INCLUDED
Received the above products in good order and condition.

BY:
RES. CERTIFICATE NO.: DATE:
arboleda company, inc.

456 Quezon Boulevard Extension, Quezon City | VAT 2011-013-357 | TIN 4004-099-951

ADDRESS: 12 Ninoy Aquino Avenue, Paranaque City TERMS: 2/10, n/30
DETAILS
5,000 boxes Pencil Plain - Mongol
7,500 pieces Bic Ballpen - Red
VAT INCLUDED

BY: RES. CERTIFICATE NO.: DATE
Sapphire Corporation
82 Quarry Avenue, Pananaque City | VAT 2011-053-852 | TIN 4004-064-456

PARTICULARS
5,000 boxes Charcoal Pencil - Staedler

800 pairs Scissors
VAT INCLUDED


TERMS: 99.150 day note ORDER NO:
PARTICULARS

VAT INCLUDED

BY:


TERMS: 2/10, n/45 ORDER NO:
PARTICULARS
7,500 pads Intermediate Pad - Old Mill

8,500 pads Yellow paper - Old Mill
4,250 reams Bond Paper - Whitey
3,000 reams Onion Skin - Milky
VAT INCLUDED
BY:

ADDRESS: 12 Ninoy Aquino Avenue, Paranaque City TERMS: Cash
PARTICULARS
350 boxes Thumbtacks - Golden
VAT INCLUDED



DETAILS
600 bottles Quink Ink
VAT INCLUDED


DETAILS
5,000 meters Plastic Cover
VAT INCLUDED



TERMS: Cash ORDER NO:
PARTICULARS
2,500 pieces Folders - Regular

2,000 pieces Folders - Long
VAT INCLUDED

BY:


DETAILS
10,000 pieces Bic Ballpen - Blue
VAT INCLUDED


ADDRESS: 12 Ninoy Aquino Avenue, Paranaque City TERMS: n/30
PARTICULARS
10,000 pieces Bic Ballpen - Black
VAT INCLUDED



PARTICULARS
2,500 Cartolina Rolls ▼

2,000 Art Paper Reams
VAT INCLUDED
BY:


DETAILS
5,000 pieces Fastener
VAT INCLUDED



PARTICULARS
4,000 pieces Thick leaved notebook
VAT INCLUDED

BY:

ADDRESS: 12 Ninoy Aquino Avenue, Paranaque City TERMS: n/15
PARTICULARS
350 boxes Paper Clips - Silver ▼
VAT INCLUDED


DETAILS
250 pieces Fountain Pen - Pil ▼
VAT INCLUDED



TERMS: Cash ORDER NO:
PARTICULARS
450 boxes Carbon Paper
VAT INCLUDED
BY:

PARTICULARS
650 boxes Typewriter Ribbon - Roll-O
VAT INCLUDED



PARTICULARS
6,000 pieces Thin leaved notebook
VAT INCLUDED

BY:


DETAILS
850 bottles Elmer's Glue
VAT INCLUDED


PARTICULARS
500 boxes Charcoal Pencil

1,300 reams bond paper - Whitey
1,500 pieces Bic ballpen - Black
1,500 pieces Bic ballpen - Blue
1,500 pieces Bic ballpen - Red
VAT INCLUDED

BY:


ADDRESS: 12 Ninoy Aquino Avenue, Paranaque City TERMS:
DETAILS
1,000 pads yellow Pad - Old Mill

1,600 bottles Elmer's G;ue
1,200 boxes Typewriter Ribbon - Roll-O
500 reams Bond Paper - Whitey
VAT INCLUDED

ADDRESS: 12 Ninoy Aquino Avenue, Paranaque City TERMS:
PARTICULARS
250 pads Yellow Pad - Old Mill

100 reams Bond Paper - Whitey
2,500 pcs. Bic Ballpen - Black
VAT INCLUDED

CES F1.2
Legend
DUCTS
04-0070356 No. 111
DATE: 2 December 2011
UNIT PRICE AMOUNT
P 50.00 P 750,000.00
50.00 675,000.00
P 1,425,000.00
ISSUED AT:
No. 101

2/10, n/30 ORDER NO.:
UNIT PRICE AMOUNT
P 70.00 P 350,000.00
8.50 63,750.00
P 413,750.00
ISSUED AT:
No. 1082
DATE: Dec. 3, 2011
2/10, n/30 ORDER NO.:
UNIT PRICE AMOUNT
P 90.00 P 450,000.00
12.00 9,600.00
P 459,600.00
ISSUED AT:
DUCTS
04-0070356 No. 127
UNIT PRICE AMOUNT
P 50.00 P 850,000.00
50.00 750,000.00
P 1,600,000.00
ISSUED AT:
DUCTS
04-0070356 No. 130
UNIT PRICE AMOUNT
P 15.00 P 112,500.00
30.00 255,000.00
130.00 552,500.00
110.00 330,000.00
P 1,250,000.00
ISSUED AT:
No. 1090
DATE: Dec. 12, 2011
ORDER NO.:
UNIT PRICE AMOUNT
P 40.00 P 14,000.00
P 14,000.00
ISSUED AT:
No. 107

ORDER NO.:
UNIT PRICE AMOUNT
P 57.00 P 34,200.00
P 34,200.00
ISSUED AT:
No. 112

ORDER NO.:
UNIT PRICE AMOUNT
P 17.50 P 87,500.00
P 87,500.00
ISSUED AT:
DUCTS
04-0070356 No. 135
UNIT PRICE AMOUNT
P 2.50 P 6,250.00
3.50 7,000.00
P 13,250.00
ISSUED AT:
No. 117

2/10, n/30 ORDER NO.:
UNIT PRICE AMOUNT
P 8.50 P 85,000.00
P 85,000.00
ISSUED AT:
No. 1095
DATE: Dec. 8, 2011
ORDER NO.:
UNIT PRICE AMOUNT
P 8.50 P 85,000.00
P 85,000.00
ISSUED AT:
DUCTS
04-0070356 No. 140
UNIT PRICE AMOUNT

▼ correct number of pieces
P 8.50 P 19,125.00 2250
145.00 108,750.00 750
P 127,875.00
ISSUED AT:
No. 120

ORDER NO.:
UNIT PRICE AMOUNT
P 1.00 P 5,000.00
P 5,000.00
ISSUED AT:
DUCTS
04-0070356 No. 145

UNIT PRICE AMOUNT
P 32.50 P 130,000.00
P 130,000.00
ISSUED AT:
No. 1099
DATE: Dec. 23, 2011
ORDER NO.:
UNIT PRICE AMOUNT
P 35.00 P 12,250.00 ▼ correct amount
P 12,250.00
ISSUED AT:
No. 127

1/10, n/20 ORDER NO.:
UNIT PRICE AMOUNT
P 103.00 P 25,750.00 ▼ Correct Balance
P 25,750.00
ISSUED AT:
DUCTS
04-0070356 No. 147
UNIT PRICE AMOUNT
P 100.00 P 45,000.00
P 45,000.00
ISSUED AT:
No. 1100
DATE: Dec. 27, 2011
ORDER NO.:
UNIT PRICE AMOUNT
P 20.50 P 19,125.00 correct amount

13,325.00
P 19,125.00
ISSUED AT:
DUCTS
04-0070356 No. 151
UNIT PRICE AMOUNT

P 27.50 P 165,000.00
P 165,000.00
ISSUED AT:
No. 130

1/10, n/15 ORDER NO.:
UNIT PRICE AMOUNT
P 22.50 P 19,125.00
P 19,125.00
ISSUED AT:
DUCTS
04-0070356 No. 7729
UNIT PRICE AMOUNT

correct figures
P 90.00 P 450.00 45,000.00
130.00 169,000.00 169,000.00
8.50 127,500.00 12,750.00
8.50 127,500.00 12,750.00
8.50 4,250.00 12,750.00
P 165,000.00 252,250.00
ISSUED AT:
No. 825

ORDER NO.:
UNIT PRICE AMOUNT
P 30.00 P 30,000.00
22.50 36,000.00
20.50 24,600.00
130.00 65,000.00
P 155,600.00
ISSUED AT:
No. 770
DATE: Jan. 3, 2012
ORDER NO.:
UNIT PRICE AMOUNT
P 30.00 P 7,500.00
130.00 13,000.00
8.50 21,250.00
8.50 25,500.00
8.50 17,000.00
P 84,250.00
ISSUED AT:
Schedule of Goods Sol
Date Sold To Invoice # Amount

2011
Dec. 1 Eagle Contractors 1251 F1.4 154,545.00
3 Dynasty Construction 1252 F1.4 2,714.00
7 Sampolio Company 1253 F1.4 36,364.00
10 Benitez Merchandising 1254 F1.4
1255 F1.4 639,427.00
15 Ida Coronel 1256 F1.4 86,659.00
17 Luli Samson 1257 F1.4 54,409.00
22 Susan de Leon 1258 F1.4 127,955.00
23 Building Blocks, Inc. 1259 F1.4
1260 F1.4 117,041.00
27 Cora Tayag 1261 F1.4
1262 F1.4 181,205.00
29 Conteno, Antonio & Tantoco 1263 F1.4 461,068.00
1,861,387.00
○ Cross-footed = Quantity sold based on Sales Invoices #1251-1263 multiplied by unit p

Goods Sold F1.3
Page 3
Amount Difference Adjusted Amount
154,545.00 ○ Cross-footed - 154,545.00

2,714.00 ○ Cross-footed 31.00 2,745.00
36,364.00 ○ Cross-footed 31.00 36,395.00
○ Cross-footed -
639,427.00 ○ Cross-footed 4,545.72 643,972.72
86,659.00 ○ Cross-footed - 86,659.00
54,409.00 ○ Cross-footed - 54,409.00
127,955.00 ○ Cross-footed 1,158.63 129,113.63
○ Cross-footed -
117,041.00 ○ Cross-footed 9.00 117,050.00
○ Cross-footed -
181,205.00 ○ Cross-footed (114.10) 181,090.90
461,068.00 ○ Cross-footed - 461,068.00
1,861,387.00 F1 5,661.25 F1 1,867,048.25
1251-1263 multiplied by unit prices (Refer to F1.2.1) net of VAT

PHYSICAL INVENTORY
LIST F1.4
GRACE CORPORATION
Physical Inventory List
January 4, 2012
UNIT COST
ITEM BRAND UNITS TOTAL
(VAT Inclusive)
Plain Pencil Mongol P 70.00 2,360 boxes P 165,200.00
Charcoal Pencil Staedler 90.00 3,680 boxes 331,200.00
Red Ballpen Bic 8.50 3,450 pieces 29,325.00
Blue Ballpen Bic 8.50 8,500 pieces 72,250.00
Black Ballpen Bic 8.50 9,500 pieces 80,750.00
Fountain Pen Pilot 103.50 230 pieces 23,690.00
Worksheet
16 columns Vernal 50.00 12,550 pads 627,500.00
Intermediate pad Old Mill 15.00 3,850 pads 57,750.00
Yello Pad Old Mill 30.00 3,800 pads 114,000.00
Bond Paper Whitey 130.00 2,800 reams 360,000.00
Onion Skin Milky 110.00 1,960 reams 215,600.00
Cartolina 9.00 1,540 rolls 13,500.00
Plastic Cover 17.50 1,300 meters 22,750.00
Art Paper 150.00 600 reams 90,000.00
Ink Quink 57.00 350 bottles 18,240.00
Regular Folder Carona 2.50 1,900 pieces 4,750.00
Long Folder Carona 3.50 1,200 pieces 4,200.00
Paper Clips Silver 30.00 300 boxes 9,000.00
Thumbtacks Golden 40.00 350 boxes 12,800.00
Glue Elmer's 22.50 660 bottles 14,850.00
Carbon Paper Blackey 100.00 360 boxes 36,000.00
Typewriter Ribbon Roll-O 20.50 630 boxes 12,915.00
Scissors Mayon 12.00 150 pairs 1,800.00
Thick Notebook 32.50 3,450 pieces 112,125.00
Thin Notebook 27.50 10,600 pieces 227,900.00
Fastener 1.10 3,450 pieces 37,950.00
Envelope - short Carona 2.50 0 pieces
Envelope - long Carona 3.50 0 pieces
Calculator
fx-39 Casio 1,800.00 0 pieces
fx-40 Casio 2,000.00 0 pieces
hl-807 Casio 1,000.00 0 pieces
Stapler Max 152.50 5 pieces 762.50
P 4,522,787.00
Audit Objectives
1. To establish the existence of inventory.
2. To observe compliance to proper stock count procedures.
3. To recompute ending inventory.
Assertions Affected
1. Existence
Audit Procedures
1. Read the manual.
2. Test for last documents used/cut off of documents.
3. Account for inventory tags used.
4. Foot / cross foot the inventory listing.
5. Perform test count.
6. Compute Ending Inventory based from adjusted balance of stock card inventory cou
Findings
Adjusted
Stock Quantity Error Quantity
No. (stock card) (Bal) (stock
card)
+ 1001 F2.1 2,360 2,360
1002 F2.1 3,680 (250) 3,430 F1.2
1003 F2.1 3,450 510 3,960 F1.2
1004 F2.1 8,500 8,500 F1.2
1005 F2.1 9,500 9,500 F1.2
1006 F2.1 250 250
1007 F2.1 12,550 12,550
1008 F2.1 10,200 10,200
1009 F2.1 14,700 14,700
1010 F2.1 12,100 50 12,150
1011 F2.1 3,850 3,850
1012 F2.1 3,800 3,800 F1.2
1013 F2.1 2,800 2,800 F1.2

1014 F2.1 1,860 1,860
< 1015 F2.1 1,600 1,600
1016 F2.1 1,300 1,300
1017 F2.1 600 600
1018 F2.1 330 330
1019 F2.1 1,800 1,800
1020 F2.1 1,250 1,250
1021 F2.1 190 190
> 1022 F2.1 240 240
1023 F2.1 760 760 F1.2
1024 F2.1 360 360
1025 F2.1 830 830 F1.2
1026 F2.1 200 (50) 150
1027 F2.1 3,450 3,450
1028 F2.1 3,400 3,400
1029 F2.1 3,450 3,450
Legend
~ Probable fraudulent activity. Amounts in unrecorded Purchase Invoic
one another. Recording of purchases on December 30,2011 and reco
result to suspicious findings.
^ 1,800 unrecorded purchases consist of 500 reams Bond Paper-White
1300 reams Bond Paper-Whitey as per Purchase Invoice # 7729, res
* 1,800 urecorded sales consist of 300 reams Bond Paper-Whitey as pe
1,000 reams as per Sales Invoice # 1266, respectively.
< Stock no. 1015 consist of an erroneous record of Purchase Invoice #1
Inventory, however is correctly recorded.
> Stock no. 1022consist of an erroneous record of Purchase Invoice #1
Inventory, however, is correctly recorded.
+ Error in Sales Invoice 1255 related to Stock No. 1001. Erroneous reco
F2.1 Obtained from Stock Cards.
E1.2 Obtained from Sales Invoices.
F1.2 count
The inventory Obtained fromcard
per stock Purchase Invoices.
is adjusted for unrecorded purchases, errors in pu
purchase invoices (refer to F1.2) and sales invoices (refer to E1.2). Above is the sche
Conclusion
suspicious year-end recordings that should be investigated further.
No further exceptions noted.
December 31,2011
INVENTORY COUNT
alance of stock card inventory count.
Unrecorded Purchase Error Balance after

Purchases Invoice # (PI) Tracing
2,360
500 7729 3,930 E1.2
1,500 7729 5,460 E1.2
1,500 7729 10,000 E1.2
1,500 7729 11,000 E1.2
250
12,550
10,200
14,700
12,150
3,850
1,000 4,800 E1.2
1,800 ^ 7729; 825 4,600 E1.2

1,860
1,600
1,300
600
330
1,800
1,250
100 290
100 340
1,600 825 2,360 E1.2
360
1,200 825 2,030 E1.2
150
3,450
3,400
3,450
nts in unrecorded Purchase Invoices # 7729 and 825 and Sales Invoices # 1264, 1265 and 1266 offset
es on December 30,2011 and recording sales of same amount on the same or next day
st of 500 reams Bond Paper-Whitey as per Purchase Invoice # 825 and

per Purchase Invoice # 7729, respectively.
00 reams Bond Paper-Whitey as per Sales Invoice #1264, 500 reams as per Sales Invoice #1265 and
# 1266, respectively.
eous record of Purchase Invoice #130 that correctly should be Purchase Invoice #140.
ous record of Purchase Invoice #1099 that correctly should be Purchase Invoice #1090.
to Stock No. 1001. Erroneous recording of inventory label of Mongol Pencil Plain; should be Paper Clips
unrecorded purchases, errors in purchases recorded, urecorded sales and errors in sales. Stock cards a
s (refer to E1.2). Above is the schedule of stock cards and findings noted. Stock cards 1002, 1004, 101
stigated further.
f2
E
r
r
o
Sales
Unrecorded r Adjusted
Invoice
Sales Balance
#
(
S
I 2,360 F8 A
(500) 1264
###) 3,680 ~ F8 A
(500) 1264
### 4,360 F8 A
(1,500) 1264 8,500 ~ F8 A
(1,500) 1264 9,500 F8 A
250 F8 A
12,550 F8 A
10,200 F8 A
### 14,400 F8 A
12,150 F8 A
3,850 F8 A
(1,000) 1266
1264; 3,800 ~ F8 A
1265;
(1,800) * 1266 2,800 ~ F8 A
1,860 F8 A
1,600 F8 A
1,300 F8 A
600 F8 A
330 F8 A
1,800 F8 A
1,250 F8 A
290 F8 A
1251
### 300 F8 A
(1,600) 1265 760 ~ F8 A
360 F8 A
(1,200) 1265 830 ~ F8 A
150 F8 A
3,450 F8 A
### 10,600 F8 A
3,450 F8 A
es # 1264, 1265 and 1266 offset

same or next day
s per Sales Invoice #1265 and
e Invoice #140.
se Invoice #1090.
encil Plain; should be Paper Clips.
and errors in sales. Stock cards are cross-referenced with

ed. Stock cards 1002, 1004, 1012, 1013, 1033 and 1035 contain
Prepared by: Date:
EAU 2/2/2012
CDS 2/2/2012
Reviewed by: Date:

SSM 2/7//2012
STOCK CARDS PER BOOKS
STOCK CARD
ITEM Pencil STOCK NO. 1001
DESCRIPTION Mongol Plain UNIT box
REFERENCE
DATE RECEIVED ISSUED BALANCE
PURCHASE INV. SALES INV.
2011
Nov. 30 Balance 200 Nov. 30
Dec. 1 PI 101 5,000 5,200 Dec. 1
4 SI 1251 1,250 3,950
12 SI 1254 800 3,150
26 SI 1259 240 2,910
30 SI 1261 50 2,860
31 SI 1265 500 2,360
STOCK CARD
DESCRIPTION Steadler charcoal UNIT box
REFERENCE
2011 Nov. 30
Nov. 30 100 Dec. 3
Dec. 3 PI 1082 5,000 5,100
4 SI 1251 250 4,850
12 SI 1254 700 4,150
26 SI 1259 120 4,030
30 SI 1261 100 3,930

31 SI 1265 500 3,680
STOCK CARD
ITEM Ballpen STOCK NO. 1003
DESCRIPTION BIC-Red UNIT piece
REFERENCE
2011
Dec. 1 PI 101 7,500 8,000 Dec. 1
4 SI 1251 400 7,600
12 SI 1254 2,500 5,100
26 SI 1259 240 4,860
30 SI 1262 150 4,720
31 SI 1263 750 3,680
STOCK CARD
DESCRIPTION BIC-Blue UNIT piece
REFERENCE
2011
Nov. 30 Balance 4,000
Dec. 4 SI 1251 750 3,250
12 SI 1255 2,500 750 Nov. 30
16 PI 117 10,000 10,750 Dec. 4
26 SI 1259 250 10,500
30 SI 1262 750 9,750
31 SI 1263 1,250 8,500
STOCK CARD
DESCRIPTION BIC-Black UNIT piece
REFERENCE
2011 Nov. 30
Nov. 30 Balance 5,000 Dec. 4
Dec. 4 SI 1251 750 4,250
12 SI 1254 2,500 1,750
18 PI 1095 10,000 11,750
26 SI 1259 250 11,500
30 SI 1262 750 10,750
31 SI 1263 1,250 9,500
STOCK CARD
ITEM Fountain Pen STOCK NO. 1006
DESCRIPTION Pilot UNIT piece
REFERENCE
2011
Dec. 7 SI 1253 70 130 Dec. 7
17 SI 1256 50 80
24 PI 127 250 330
26 SI 1259 80 250
STOCK CARD
ITEM Worksheet STOCK NO. 1007
DESCRIPTION Vernal - 16 columns UNIT pads
REFERENCE
2011
Dec. 2 PI 117 15,000 15,100 Dec. 2
12 SI 1254 500 14,600
17 SI 1256 300 14,300
30 SI 1261 500 13,800
31 SI 1263 1,250 12,550
STOCK CARD
REFERENCE
2011
Dec. 2 PI 111 13,500 13,700 Dec. 2
12 SI 1254 500 13,200
17 SI 1256 500 12,700
30 SI 1261 500 12,200
31 SI 1263 2,000 10,200
STOCK CARD
REFERENCE
2011
Dec. 6 PI 127 17,000 17,100 Dec. 6
10 SI 1253 50 17,050
12 SI 1254 500 16,550
17 SI 1256 400 16,150
30 SI 1261 200 15,950
31 SI 1263 1,250 14,700
STOCK CARD
REFERENCE
2011
Nov. 30 Balance 200
Dec. 6 PI 127 15,000 15,200
10 SI 1253 50 15,150
12 SI 1254 500 14,650
17 SI 1256 500 14,100
30 SI 1261 500 13,600
31 SI 1263 1,500 12,100
STOCK CARD
ITEM Pad Paper STOCK NO. 1011
DESCRIPTION Old Mill - intermediate UNIT pads
REFERENCE
2011
Nov. 30 Balance 100
Dec. 10 PI 130 7,500 7,600
12 SI 1255 1,500 6,100
19 SI 1257 250 5,850
23 SI 1258 1,500 4,350
30 SI 1261 500 3,850
STOCK CARD
DESCRIPTION Old Mill - yellow UNIT pads
REFERENCE
2011
Dec. 10 PI 130 8,500 8,700 Dec. 10
12 SI 1254 1,500 7,200
19 SI 1257 450 6,750
23 SI 1258 1,250 5,500
30 SI 1261 500 5,000
31 SI 1263 1,200 3,800
STOCK CARD
ITEM Bond Paper STOCK NO. 1013
DESCRIPTION Whitey UNIT reams
REFERENCE
2011
Nov. 30 Balance 200
Dec. 4 SI 1251 150 50
10 PI 130 4,250 4,300 Nov. 30
SI 1253 100 4,200 Dec. 4
12 SI 1254 500 3,700
17 SI 1257 100 3,600
26 SI 1260 200 3,400
31 SI 1263 600 2,800
STOCK CARD
ITEM Onion Skin STOCK NO. 1014
DESCRIPTION Milky UNIT reams
REFERENCE
2011
Nov. 30 Balance 300
Dec. 4 SI 1251 200 100
8 SI 1253 80 20
10 PI 130 3,000 3,020
12 SI 1254 700 2,320
19 SI 1257 100 2,220
26 SI 1260 360 1,860
Nov. 30
Dec. 4
STOCK CARD
ITEM Cartolina STOCK NO. 1015
DESCRIPTION UNIT rolls
REFERENCE
2011
Nov. 30 Balance 500.00 Nov. 30
Dec. 12 SI 1254 300.00 200.00 Dec. 12
17 SI 1256 150.00 50.00
20 PI 130 2,250.00 2,300.00
23 SI 1258 450.00 1,850.00
30 SI 1261 250.00 1,600.00
STOCK CARD
ITEM Plastic Cover STOCK NO. 1016
DESCRIPTION UNIT meters
REFERENCE
2011
Nov. 30 Balance 100
Dec. 9 PI 112 5000 5100
12 SI 1254 2500 2600
23 SI 1258 1300 1300
STOCK CARD
ITEM Art Paper STOCK NO. 1017
DESCRIPTION UNIT reams
REFERENCE
2011
Dec. 12 SI 1254 250.00 50.00 Dec. 12
20 PI 140 750.00 800.00
23 SI 1258 200.00 600.00
STOCK CARD
ITEM Ink STOCK NO. 1018
DESCRIPTION Quink UNIT bottle
REFERENCE
2011
Dec. 7 PI 107 600.00 700.00 Dec. 7
10 SI 1253 70.00 630.00
12 SI 1255 150.00 480.00
26 SI 1260 150.00 330.00
STOCK CARD
ITEM Folder STOCK NO. 1019
DESCRIPTION Regular UNIT piece
REFERENCE
2011
Nov. 30 Balance 1,000.00 Nov. 30
Dec. 7 SI 1252 350.00 650.00 Dec. 7
12 SI 1254 500.00 150.00
15 PI 135 2,500.00 2,650.00
23 SI 1258 250.00 2,400.00
26 SI 1259 600.00 1,800.00
STOCK CARD
DESCRIPTION Long UNIT piece
REFERENCE
2011
Dec. 12 SI 1254 500.00 100.00 Dec. 12
15 PI 135 2,000.00 2,100.00
23 SI 1258 250.00 1,850.00
26 SI 1259 600.00 1,250.00
STOCK CARD
ITEM Paper Clips STOCK NO. 1021
DESCRIPTION Silver UNIT box
REFERENCE
2011
Dec. 4 SI 1251 10.00 140.00 Dec. 4
12 SI 1255 100.00 40.00
17 SI 1256 20.00 20.00
23 PI 1099 250.00 270.00
26 SI 1259 30.00 240.00
30 SI 1261 50.00 190.00
STOCK CARD
ITEM Thumb Tacks STOCK NO. 1022
DESCRIPTION Golden UNIT box
REFERENCE
2011
Dec. 4 SI 1251 10.00 190.00 Dec. 4
12 SI 1255 100.00 90.00
17 SI 1256 20.00 70.00
23 PI 1099 250.00 320.00
26 SI 1259 30.00 290.00
30 SI 1261 50.00 240.00
STOCK CARD
ITEM Glue STOCK NO. 1023
DESCRIPTION Elmer's UNIT bottle
REFERENCE
2011
Dec. 7 SI 1252 60.00 540.00 Dec. 7
12 SI 1255 300.00 240.00
23 SI 1258 150.00 90.00
26 SI 1260 60.00 30.00
29 PI 130 850.00 880.00
30 SI 1261 120.00 760.00
STOCK CARD
ITEM Carbon paper STOCK NO. 1024
DESCRIPTION Blackie UNIT bottle
REFERENCE
2011
Nov. 30 Balance 200.00
Dec. 4 SI 1251 20.00 180.00
8 SI 1253 20.00 160.00
12 SI 1255 150.00 10.00
26 PI 147 450.00 460.00
26 SI 1259 40.00 420.00
30 SI 1263 60.00 360.00
STOCK CARD
ITEM Typewritter Ribbon STOCK NO. 1025
DESCRIPTION Rollo-O UNIT box
DATE REFERENCE RECEIVED ISSUED BALANCE
2011
Dec. 7 SI 1252 20.00 580.00 Dec. 7
12 SI 1255 240.00 340.00
26 SI 1259 60.00 280.00
27 PI 1100 650.00 930.00
31 SI 1263 100.00 830.00
STOCK CARD
ITEM Scissors STOCK NO. 1026
DESCRIPTION UNIT pair
REFERENCE
2011
Dec. 3 PI 1082 800.00 850.00 Dec. 3
12 SI 1251 300.00 550.00
17 SI 1253 200.00 350.00
19 SI 1255 50.00 300.00
23 SI 1259 150.00 200.00
STOCK CARD
ITEM Notebook STOCK NO. 1027
DESCRIPTION Leaf Thick UNIT piece
REFERENCE
2011
Dec. 12 SI 1255 1,500.00 500.00 Dec. 12
19 SI 1257 300.00 200.00
22 PI 145 4,000.00 4,200.00
23 SI 1258 300.00 3,900.00
31 SI 1262 450.00 3,450.00
STOCK CARD
DESCRIPTION Bind Thin UNIT piece
REFERENCE
2011
Dec. 12 SI 1255 4,000.00 3,000.00
19 SI 1257 1,200.00 1,800.00
23 SI 1258 1,200.00 600.00
28 PI 151 6,000.00 6,600.00
30 SI 1262 3,200.00 3,400.00
STOCK CARD
ITEM Fastener STOCK NO. 1029
DESCRIPTION UNIT piece
REFERENCE
2011
Dec. 12 SI 1252 350.00 1,150.00 Dec. 12
19 SI 1255 1,000.00 150.00
22 PI 120 5,000.00 5,150.00
23 SI 1258 500.00 4,650.00
31 SI 1260 1,200.00 3,450.00
STOCK CARDS PER
COMPUTATION F2.1
STOCK CARD
DESCRIPTION Mongol Plain UNIT box
REFERENCE
2011
Nov. 30 Balance 200
Dec. 1 PI 101 5,000 5,200
4 SI 1251 1,250 3,950
10 SI 1255 100 3,850 U
12 SI 1254 800 3,050
26 SI 1259 240 2,810
30 SI 1261 50 2,760
31 SI 1263 500 2,260 WSI
STOCK CARD
DESCRIPTION Steadler charcoal UNIT box
REFERENCE
2011
Nov. 30 100
Dec. 3 PI 1082 5,000 5,100
4 SI 1251 250 4,850
12 SI 1254 700 4,150
26 SI 1259 120 4,030
30 SI 1261 100 3,930
29 PI 7729 500 4,430

30 SI 1264 500 3,930 U
31 SI 1265 250 3,680
STOCK CARD
DESCRIPTION BIC-Red UNIT piece
REFERENCE
2011
Nov. 30 Balance 500
Dec. 1 PI 101 7,500 8,000
4 SI 1251 400 7,600
12 SI 1254 2,500 5,100
26 SI 1259 240 4,860
30 SI 1262 750 4,110
31 SI 1263 750 3,360
29 PI 7729 1,500 4,860
30 SI 1264 500 4,360 U
STOCK CARD
DESCRIPTION BIC-Blue UNIT piece
REFERENCE
2011
Dec. 4 SI 1251 750 3,250
12 SI 1255 2,500 750
16 PI 117 10,000 10,750
26 SI 1259 250 10,500
30 SI 1262 750 9,750
31 SI 1263 1,250 8,500
29 PI 7729 1,500 10,000 U
30 SI 1264 1,500 8,500 U
STOCK CARD
DESCRIPTION BIC-Black UNIT piece
REFERENCE
2011
Dec. 4 SI 1251 750 4,250
12 SI 1254 2,500 1,750
18 PI 1095 10,000 11,750
26 SI 1259 250 11,500
27 SI 1262 750 10,750
29 SI 1263 1,250 9,500
30 SI 1264 1,500 8,000 U
STOCK CARD
ITEM Fountain Pen STOCK NO. 1006
DESCRIPTION Pilot UNIT piece
REFERENCE
2011
Nov. 30 Balance 200
Dec. 7 SI 1253 70 130
17 SI 1256 50 80
24 PI 127 250 330
26 SI 1259 80 250
STOCK CARD
REFERENCE
2011
Nov. 30 Balance 100
Dec. 2 PI 117 15,000 15,100
12 SI 1254 500 14,600
17 SI 1256 300 14,300
30 SI 1261 500 13,800
31 SI 1263 1,250 12,550
STOCK CARD
REFERENCE
2,011
Nov. 30 Balance 200
Dec. 2 PI 111 13,500 13,700
12 SI 1254 500 13,200
17 SI 1256 500 12,700
30 SI 1261 500 12,200
31 SI 1263 2,000 10,200
STOCK CARD
REFERENCE
2,011
Nov. 30 Balance 100
Dec. 6 PI 127 17,000 17,100
10 SI 1253 50 17,050
12 SI 1254 500 16,550
17 SI 1256 400 16,150
30 SI 1261 500 15,650
31 SI 1263 1,250 14,400
STOCK CARD
REFERENCE
2,011
Nov. 30 Balance 200
Dec. 6 PI 127 15,000 15,200
10 SI 1253 50 15,150
12 SI 1254 500 14,650
17 SI 1256 500 14,150
30 SI 1261 500 13,650
31 SI 1263 1,500 12,150
STOCK CARD
DESCRIPTION Old Mill - intermediate UNIT pads
REFERENCE
2,011
Nov. 30 Balance 100
Dec. 10 PI 130 7,500 7,600
12 SI 1255 1,500 6,100
19 SI 1257 250 5,850
23 SI 1258 1,500 4,350
30 SI 1261 500 3,850
STOCK CARD
DESCRIPTION Old Mill - yellow UNIT pads
REFERENCE
2,011
Nov. 30 Balance 200
Dec. 10 PI 130 8,500 8,700
12 SI 1254 1,500 7,200
19 SI 1257 450 6,750
23 SI 1258 1,250 5,500
30 SI 1261 500 5,000
31 SI 1263 1,200 3,800
30 PI 825 1,000 4,800
30 SI 1266 1,000 3,800
STOCK CARD
ITEM Bond Paper STOCK NO. 1013
DESCRIPTION Whitey UNIT reams
REFERENCE
2,011
Nov. 30 Balance 200
Dec. 4 SI 1251 150 50
10 PI 130 4,250 4,300
SI 1253 100 4,200
12 SI 1254 500 3,700
17 SI 1257 100 3,600
26 SI 1260 200 3,400
31 SI 1263 600 2,800
29 PI 7729 1,300 4,100 U
30 SI 1265 500 3,600 U
30 SI 1264 300 3,300 U
30 PI 825 500 3,800 U
30 SI 1266 1,000 2,800 U
STOCK CARD
ITEM Onion Skin STOCK NO. 1014
DESCRIPTION Milky UNIT reams
REFERENCE
2,011
Nov. 30 Balance 300
Dec. 4 SI 1251 200 100
8 SI 1253 80 20
10 PI 130 3,000 3,020
12 SI 1254 700 2,320
19 SI 1257 100 2,220
26 SI 1260 360 1,860
STOCK CARD
ITEM Cartolina STOCK NO. 1015
DESCRIPTION UNIT rolls
REFERENCE
2,011
Nov. 30 Balance 500
Dec. 12 SI 1254 300 200
17 SI 1256 150 50
20 PI 140 2,250 2,300
23 SI 1258 450 1,850
30 SI 1261 250 1,600
STOCK CARD
ITEM Plastic Cover STOCK NO. 1016
DESCRIPTION UNIT meters
REFERENCE
2011
Nov. 30 Balance 100
Dec. 9 PI 112 5000 5100
12 SI 1254 2500 2600
23 SI 1258 1300 1300
STOCK CARD
ITEM Art Paper STOCK NO. 1017
DESCRIPTION UNIT reams
REFERENCE
2,011
Nov. 30 Balance 300
Dec. 12 SI 1254 250 50
20 PI 140 750 800
23 SI 1258 200 600
STOCK CARD
ITEM Ink STOCK NO. 1018
DESCRIPTION Quink UNIT bottle
REFERENCE
2,011
Nov. 30 Balance 100
Dec. 7 PI 107 600 700
10 SI 1253 70 630
12 SI 1255 150 480
26 SI 1260 150 330
STOCK CARD
DESCRIPTION Regular UNIT piece
REFERENCE
2,011
Dec. 7 SI 1252 350 650
12 SI 1254 500 150
15 PI 135 2,500 2,650
23 SI 1258 250 2,400
26 SI 1259 600 1,800
STOCK CARD
DESCRIPTION Long UNIT piece
REFERENCE
2,011
Nov. 30 Balance 600
Dec. 12 SI 1254 500 100
15 PI 135 2,000 2,100
23 SI 1258 250 1,850
26 SI 1259 600 1,250
STOCK CARD
ITEM Paper Clips STOCK NO. 1021
DESCRIPTION Silver UNIT box
REFERENCE
2,011
Nov. 30 Balance 150
Dec. 4 SI 1251 10 140
12 SI 1255 100 40
17 SI 1256 20 20
23 PI 1099 350 370
26 SI 1259 30 340
30 SI 1261 50 290
STOCK CARD
ITEM Thumb Tacks STOCK NO. 1022
DESCRIPTION Golden UNIT box
REFERENCE
2,011
Nov. 30 Balance 200
Dec. 4 SI 1251 10 190
12 SI 1255 150 40
17 SI 1256 20 20
23 PI 1099 350 370
26 SI 1259 20 350
30 SI 1261 50 300
STOCK CARD
ITEM Glue STOCK NO. 1023
DESCRIPTION Elmer's UNIT bottle
REFERENCE
2,011
Nov. 30 Balance 600
Dec. 7 SI 1252 60 540
12 SI 1255 300 240
23 SI 1258 150 90
26 SI 1260 60 30
29 PI 130 850 880
30 SI 1261 120 760
30 PI 7729 1,600 2,360
30 SI 1265 1,600 760
STOCK CARD
ITEM Carbon paper STOCK NO. 1024
DESCRIPTION Blackie UNIT bottle
REFERENCE
2011
Nov. 30 Balance 200
Dec. 4 SI 1251 20 180
8 SI 1253 20 160
12 SI 1255 150 10
26 PI 147 450 460
26 SI 1259 40 420
30 SI 1263 60 360
STOCK CARD
ITEM Typewritter Ribbon STOCK NO. 1025
DESCRIPTION Rollo-O UNIT box
REFERENCE
2011
Nov. 30 Balance 600
Dec. 7 SI 1252 20 580
12 SI 1255 240 340
26 SI 1259 60 280
27 PI 1100 650 930
30 PI 825 1,200 2,130
30 SI 1265 1,200 930
31 SI 1263 100 830
STOCK CARD
ITEM Scissors STOCK NO. 1026
DESCRIPTION UNIT pair
REFERENCE
2,011
Nov. 30 Balance 50
Dec. 3 PI 1082 800 850
12 SI 1251 300 550
17 SI 1253 200 350
19 SI 1255 50 300
23 SI 1259 150 150
STOCK CARD
DESCRIPTION Leaf Thick UNIT piece
REFERENCE
2,011
Dec. 12 SI 1255 1,500 500
19 SI 1257 300 200
22 PI 145 4,000 4,200
23 SI 1258 300 3,900
31 SI 1262 450 3,450
STOCK CARD
DESCRIPTION Bind Thin UNIT piece
REFERENCE
2,011
Dec. 12 SI 1255 1,000 6,000
19 SI 1257 300 5,700
23 SI 1258 300 5,400
28 PI 151 6,000 11,400
30 SI 1262 800 10,600
STOCK CARD
ITEM Fastener STOCK NO. 1029
DESCRIPTION UNIT piece
REFERENCE
2,011
Dec. 12 SI 1252 350 1,150
19 SI 1255 1,000 150
22 PI 120 5,000 5,150
23 SI 1258 500 4,650
31 SI 1260 1,200 3,450
INVENTORY COUNT SHEET
DATE OF COUNT: CLIENT'S NAME
JANUARY 4, 2012
BALANCE SHEET DATE: GRACE CORPORATION
DECEMBER 31, 2011
DESCRIPTION QUANTITY
AUDITOR'S STOCK PER CLIENT'S
BRAND & STOCK UNIT COUNT PER COUNT COUNT LIST
Bic Ballpen
- Red pcs. 3,450 F2.1 3,450 F1.4 3,450
- Blue pcs. 8,500 F2.1 8,500 F1.4 8,500
- Black pcs. 9,500 F2.1 9,500 F1.4 9,500
Charcoal Pencil box 3,680 F2.1 3,680 F1.4 3,680
Plain Pencil box 2,360 F2.1 2,360 F1.4 2,360
Whitey Bond paper ream 2,800 F2.1 2,800 F1.4 2,800

Yellow pad pad 3,800 F2.1 3,800 F1.4 3,800
Glue Elmer's botl. 660 F2.1 760 F1.4 660
Roll-O Typewiter ribbo box 630 F2.1 830 F1.4 630
Calculator
- fx-39 pcs. 0 - -
- fx-40 pcs. 0 - -
- hl-807 pcs. 0 - -
Max Stapler pcs. 5 - -
Worksheet
- 16 columns pads 12,550 F2.1 12,550 F1.4 12,550
- 14 columns pads 10,200 F2.1 10,200 F1.4 10,200
- 12 columns pads 14,400 F2.1 14,700 F1.4 14,400
- 10 columns pads 12,150 F2.1 12,100 F1.4 12,150
TAKEN BY SHEET NO. _____ OF _____ SHEETS
AUDITOR'S REPRESENTATIVE CLIENT'S REPRESENTATIVE
FOR AUDITOR FOR CLIENT

Legend
# Difference due to possible theft
= Error due to footing
~ Error in Sales Invoice #1261
F2.2
STICK LOCATION
STORE
DIFFERENCE REMARKS
-
-
-
-
-
-
-
100 theft #
200 theft #
-
-
-
-
-
-
300 error ~
50 error -computatio =
HEET NO. _____ OF _____ SHEETS
COMPLETE CHECK
TEST CHECK
December 31,2011
INVENTORY CONFIRMATION
Audit Objectives
1. To identify inventory not included in the physical count.
Assertions Affected
1. Existence
2. Rights & obligation
3. Completeness
Audit Procedures
1. Make inquiries on the existence of goods on consignment or located in outside ware
2. For material items, visit the warehouse or send out confirmation letters to warehous
3. Inspect documents and send a confirmation letter to the public warehouse and/or co
theCompare
4. correct quantity of inventories
the amount confirmed in
bytheir custody. custodian in the public warehouse
the respective
consignee with the amount reflected by the entity in its financial statement for goods o
consignment and/or public storage.
5. Investigate differences and adjust account balances if necessary.
Findings
Upon inquiry of contracts of consignment and public warehouse from the managemen
that such documents were not used by Grace Corporation. Therefore, there were no in
located outside of the entity. All inventories accounted for during the physical count re
entire quantity of inventories owned by Grace Corporation at the time of count.
Conclusion
Prepared by:
A
C
Reviewed by:
MRL
F3
or located in outside warehouses.

mation letters to warehouses or consignees.
public warehouse and/or consignee for
an in the public warehouse and/or
ncial statement for goods out in
use from the management, it was found

herefore, there were no inventories
uring the physical count represents the
t the time of count.
Prepared by: Date:

MKKRA 2/7/2012
RAC 2/7/2012
Reviewed by: Date:

MRL 2/7/2012
December 31,2011
REVIEW OF OTHER
IMPORTANT MATTERS
Audit Objectives
1. To identify major purchase agreements.
2. To determine inventories that are pledged.
Assertions Affected
Audit Procedures
1. Inquire with management regarding contracts and agreements affecting inventory.
2. Obtain contracts and other documentations of agreements concerning inventory.
3. Inspect contracts for necessary disclosures to conform with appropriate standards.
4. Provide disclosures necessary, if any.
Upon inspection of the documents provided by the management, it was found that the
Findings pledged or assigned to a third party. It was also found that Grace Corpora
receivables
into purchase agreements with any of its suppliers.
Conclusion
mber 31,2011
EW OF OTHER
TANT MATTERS
F4
d agreements affecting inventory.

eements concerning inventory.
orm with appropriate standards.
anagement, it was found that there were no

was also found that Grace Corporation did not enter
Prepared byDate:
AKRC 2/8/2012
MRL 2/8/2012
Reviewed bDate:
SPR 2/8/2012
December 31,2011
RECOMPUTATION OF
INVENTORY VALUATION
Audit Objectives
1. To ensure proper valuation of inventory.
2. To ensure the right amount of profit is reflected in the financial statements.
3. To determine the proper amount to be recorded in the statement of financial positio
Assertions Affected
1. Valuation / Allocation
Audit Procedures
1. Ascertain what elements of cost are included.
2. If standard costs are used, inquire into basis of standards, how these compare with a
and how variances are treated.
3. Test check cost prices used with purchase invoices received in the month(s) prior to
4. Follow up valuation of all damaged or obsolete inventories noted during the observa
physical counting with a view of establishing a net realizable value
Findings
Upon analyzation of Grace Corporation's nature as a merchandising company, the aud
recomputing for the valuation of inventory (applied direct labor rate, OH rate, etc.) will
The cost of inventories will be based on the purchase price net of VAT.
Conclusion
Prepared by:
MRL
AKRC
Reviewed by:
S
F5
cial statements.
ment of financial position.
ow these compare with actual costs
in the month(s) prior to counting.

oted during the observance of
alue
ising company, the audit procedure of

r rate, OH rate, etc.) will not apply.
of VAT.
Prepared by: Date:

MRL 2/8/2012
AKRC 2/8/2012
Reviewed by: Date:

SSM 2/8/2012
December 31,2011
REVIEW LCNRV OF INVENTORY
Audit Objectives
1. To ensure proper valuation of inventory.
2. To determine the proper amount to be recorded in the statement of financial positio
3. To conform with IAS 2.
Assertions Affected
1. Valuation / allocation
Audit Procedures
1. Select a sample of inventory.
2. Compare its market prices with its recorded cost.
3. Correct the valuation of inventory in accordance with IAS 2 which is to record invent
of cost or net realizable value”.
Findings
The inventories of Grace Corporation were valued at cost, net of VAT. Their respective
values are difficult to ascertain due to incomplete and limited resources. Hence, the in
continue to be valued at cost, net of VAT, in th Statement of Financial Position and in o
financial statements.
Conclusion
Prepared by
A
MRL
Reviewed by
EAU
F6
ment of financial position
hich is to record inventories at “lower
VAT. Their respective net realizable

sources. Hence, the inventories will
ancial Position and in other relevant
Prepared by: Date:

SPR 2/9/2012
MRL 2/9/2012
Reviewed by: Date:

EAU 2/9/2012
December 31,2011
INVENTORY CUT-OFF
Audit Objectives
1. To determine if all balances of purchases are recorded in the proper period.
2. To determine if all balances of sales and cost of sales transactions are recorded in th
3. To determine if all inventory adjustments are taken into account in the proper perio
Assertions Affected
1. Completeness
Audit Procedures
1. Obtain and examine sales invoices and purchase invoices 15 days before and after
2. Trace sales & purchases invoices to the books
3. Check whether sale and purchases are appropriately recorded as addition or deduct
inventory account for the period.
Findings
1. Sales Invoice # 1264 was not recorded. This pertains to merchandise made t
terms Casn on Delivery on December 30, 2011. The sales invoice recorded sale
and cost of sale P113,750.
PAJE 1 Cash
Sales
Output Tax
To record sales made to Eagle Contractors
PAJE 2 Cost of goods sold
2. Sales Invoice # 1265 was not recorded. This pertains to items ordered by Dy
amounting to a total of P 186,250 with cost of sale P 125,600. The items are re
sales invoice but are not reflected in the book as deduction in inventory.
PAJE 3 Cash
Sales
Output Tax
To record sales made to Dynasty Corporation
3. Sales Invoice # 1266 was not recorded. This pertains to items ordered by Be
amounting to P232,000 with cost of sale P 160,000. Items ordered are recorded
invoice but not reflected in the book as deduction in inventory.
PAJE 5 Accounts Receivable
Sales
Output Tax
To record credit sales made to Benitez Merchandising
4. Sales Invoices # 1267 and 1268 were not recorded. This pertains to items o
Merchandising and Luli Samson amounting to P 93, 750 and 29725 respectively
P76,591. Both sales occurred on Jan. 3, 2012. Unrecorded sale from sales invoi
not adjusted because it occurred Jan. 3, 2012 (see F7.1 for further explanation)
5. Purchase Invoice # 7729 from Genius Paper Products was not recorded amo
PAJE 7 Merchandise Inventory
Input VAT Payable
Accounts Payable
To record purchase of inventoryfrom Genius Paper Product
6. Purchase Invoice # 825 from Arboleda Company Inc. was not recorded amou
PAJE 8 Merchandise Inventory
Input VAT Payable
Accounts Payable
To record purchase of inventory from Arboleda company, I
Conclusion
There were no further exceptions noted based from the results obtained.
31,2011
CUT-OFF F7
n the proper period.
ansactions are recorded in the proper period.
account in the proper period.
es 15 days before and after year-end.
corded as addition or deduction from the merchandise
ains to merchandise made to Eagle Contractors with

e sales invoice recorded sales amounting to P 165, 550
165,550.00
150,500.00
15,050.00
Contractors
103,409.00
103,409.00
ains to items ordered by Dynasty Corporation

P 125,600. The items are recorded in their respective
eduction in inventory.
186,250.00
### 169,318.00
16,932.00
ty Corporation
114,181.00
114,181.00
ains to items ordered by Benitez Merchandising

Items ordered are recorded in their respective sales
n inventory.
232,000.00
210,909.00
21,091.00
145,455.00
145,455.00
ded. This pertains to items ordered by Benitez

750 and 29725 respectively, with total cost of sale
corded sale from sales invoices #1267 and 1268 were
F7.1 for further explanation).
ducts was not recorded amounting P252, 250.
229,318.00
22,932.00
252,250.00
yfrom Genius Paper Products
Inc. was not recorded amounting P155,600.

141,455.00
14,145.00
155,600.00
y from Arboleda company, Inc.
m the results obtained.
Prepared by: Date:

CDS 2/9/2012
EAU 2/9/2012
Reviewed by:Date:
SSM 2/12/2012
December 31, 20
Cost of Sales Cutoff S
Sales Date Client Terms

Invoice
1256 12/15/2011 Ida Coronel 2/10, n/30 F7.2

1257 12/17/2011 Luli Samson 2/10, n/30 F7.2
1258 12/23/2011 Susan de Leon 2/10, n/30 F7.2
1259 12/23/2011 Building Blocks, Inc. Cash F7.2
1260 12/23/2011 Building Blocks, Inc. Cash F7.2
1261 12/27/2011 Cora Tayag 2/10,n/30 F7.2
1262 12/27/2011 Cora Tayag 2/10, n/30 F7.2
1263 12/29/2011 Centenio, Antonio & TantCash F7.2
1264 12/30/2011 Eagle Contractors C.O.D. F2.2
1265 12/30/2011 Dynasty Corporation C.O.D. F2.2
1266 12/30/2011 Benitez Merchandising 2/10,n/30 F2.2
1267 1/3/2012 Benitez Merchandising C.O.D. F2.2
1268 1/3/2012 Luli Samson 2/10,n/30 F2.2
Legend
F7.2 Obtained from Sales book
F2.2 Unrecorded sales Obtained from Sales Invoice
F7.1.1 Computation of cost of sale for unrecorded sales invoice
F7.1.2 Cost of sale obtained from General journal (page 3)
December 31, 2011
Cost of Sales Cutoff Schedule
Sales Cost of sale Sales already

Should be included
recorded ?in Dec. 31, 2011
sales
138, 285 F7.1.2 86,659 YES YES

86,850 F7.1.2 54,409 YES YES
204,475 F7.1.2 127,955 YES YES
75,805 F7.1.2 YES YES
111,395 F7.1.2 117,041 YES YES
208,600 F7.1.2 YES YES
81,275 F7.1.2 181,205 YES YES
736,000 F7.1.2 461,068 YES YES
165,550 F7.1.1 103,409 NO YES
186,250 F7.1.1 114, 181 NO YES
232,000 F7.1.1 145,455 NO YES
93,750 F7.1.1 57,955 NO NO
29,755 F7.1.1 18,636 NO NO
F7.1
DIFFERENCE
(Adjustments in
cost of sales)
103,409
114 181
145,455
COMPUTATION OF COST OF SALE FOR UNRECORD
INVOICES
INVOICE No.
CORPORATION
VAT 2011-002-148 | TIN 4004-009-175
12 Ninoy Aquino Avenue, Paranaque City | Tel: 632 843 7689 | Telefax: 632 843 7690Date 30 December 2011
Delivery Receipt No.
Charged to: Eagle Contractors Job Order No.

Delivered to: 11 Forbes St., Makati City P. O. No.
Terms 2/10, n/30
Quantity Unit Description Unit Price
500 box Charcoal Pencil - Staedler P 130.50

300 ream Bond Paper- Whitey 188.50
1,500 piece Bic Ballpen - Black 12.50
1,500 piece Bic Ballpen - Blue 12.50
500 piece Bic Ballpen - Red 12.50
TOTAL
12% interest per annum is to be charged on all overdue accounts, plus 23% on said
amount for attornye's fees and cost of collection, the parties expressly submit themselves All merchandise covered by this invoice has
to the jurisdiction of the Courts of the City of Manila in any legal action arising out of this been inspected, verified and checked.
transaction. Without in any way attempting to divert on any other court or courts, returned
goods will not be accepted without written authority from our office, the above
merchandise have been carefully counted, checked and packed, packages delivered by
carrier should be checked with those recorded above. Received by:
Customer/Receiver
INVOICE No.
CORPORATION
VAT 2011-002-148 | TIN 4004-009-175
Charged to: Dynasty Construction Job Order No.

Delivered to: 30 Rizal Ave., Sta. Cruz, Manila P. O. No.
Terms cash
1,600 bottle elmer's glue P 35.00

1,200 box Typewriter Ribbon- Roll-O 30.00
500 realm Bond Paper- Whitey 188.50
TOTAL
Customer/Receiver
INVOICE No.
CORPORATION
VAT 2011-002-148 | TIN 4004-009-175
Charged to: Benitez Merchandising Job Order No.

Delivered to: 582 Kamagong St., Makati City P. O. No.
Terms 2/10, n/30
1,000 pad Yellow Paper- Old Mill P 43.50

1,000 ream Bond Paper - Whitey 188.50
TOTAL
Customer/Receiver
INVOICE No.
CORPORATION
VAT 2011-002-148 | TIN 4004-009-175
12 Ninoy Aquino Avenue, Paranaque City | Tel: 632 843 7689 | Telefax: 632 843 7690Date 3 January 2012
Charged to: Benitez Marketing Job Order No.

Delivered to: 582 Kamagong St., Makati City P. O. No.
Terms 2/10, n/30
2,500 piece Bic Ballpen - black 12.50

3,000 piece Bic Ballpen - blue 12.50
2,000 piece Bic Ballpen -red 12.50
TOTAL
Customer/Receiver
INVOICE No.
CORPORATION
VAT 2011-002-148 | TIN 4004-009-175
12 Ninoy Aquino Avenue, Paranaque City | Tel: 632 843 7689 | Telefax: 632 843 7690Date 3 January 2012
Charged to: Luli Samson Job Order No.

Delivered to: 852 Buendia Ave., Makati City P. O. No.
Terms 2/10, n/30
250 pad yellow paper - old mill 43.50

100 ream bond paper - whitey 188.50
TOTAL
Customer/Receiver
S
FOR UNRECORDED SALES F7.1.1
1264 Legend
30 December 2011
317
ms 2/10, n/30
Amount Purchase Unit Cost Total Cost Inventory

(vat included) (net of vat)
P 65,250.00 F2 P 90.00 45,000.00 40,909.09 ◊
56,550.00 F2 130.00 39,000.00 35,454.55 ◊
18,750.00 F2 8.50 12,750.00 11,590.91 ◊
18,750.00 F2 8.50 12,750.00 11,590.91 ◊
6,250.00 F2 8.50 4,250.00 3,863.64 ◊
TOTAL 113,750.00 103,409.09 *
F2 Obtained from Inventory Count

* Cost of inventory sold which is not recorded in the sales book
◊ Cost of goods sold per item (net of 10% vat)
P 165,550.00
rchandise covered by this invoice has

nspected, verified and checked.
Customer/Receiver
1265
30 December 2011
318

P 56,000.00 F2 P 22.50 36,000.00 32,727.27 ◊
36,000.00 F2 20.50 24,600.00 22,363.64 ◊
94,250.00 F2 130.00 65,000.00 59,090.91 ◊
-------------- TOTAL 125,600.00 114,181.82 *

P 186,250.00

Customer/Receiver
1266
30 December 2011
319
ms 2/10, n/30

P 43,500.00 F2 P 30.00 30,000.00 27,272.73 ◊
188,500.00 F2 130.00 130,000.00 118,181.82 ◊
------------- 160,000.00 145,454.55 *

P 232,000.00

Customer/Receiver
1267
3 January 2012
320
ms 2/10, n/30

31,250.00 F2 P 8.50 21,250.00 19,318.18 ◊
37,500.00 F2 8.50 25,500.00 23,181.82 ◊
25,000.00 F2 8.50 17,000.00 15,454.55 ◊
63,750.00 57,954.55 *
F2 obtained from Inventory count

P 93,750.00

Customer/Receiver
1268
3 January 2012
321
ms 2/10, n/30

10,875.00 F2 P 30.00 7,500.00 6,818.18 ◊
18,850.00 F2 130.00 13,000.00 11,818.18 ◊
20,500.00 18,636.36 *

P 29,725.00

Customer/Receiver
GENERAL JOURNAL
Date Particulars F Debit

2011
Dec. 1 Accounts Payable 1001 1,906,500.00
Notes Payable 1002
Issuance of 90-day 24% note to
Genius Paper Products.
5 Sales Returns and Allowances 3003 20,000.00

Accounts Receivable 104
Issued credit memo to Solomon Enterprises
for defective merchandise.
6 Accounts Payable 1001 1,600,000.00

Notes Payable 1002
Issuance of 150-day 27% note to
Genius Paper Products.
8 Notes Receivable 106 470,000.00

Received 60-day 24% note from
Johann Morales.
13 Sales Returns and Allowances 3003 21,475.00

Issued credit memo to Benitez
Merchandising for defective merchandise.
26 Subscription Receivable 2003 5,250,000.00

Subscribed Capital Stock 2002
Subscription for 50,000 shs by M. Paredes.
31 Depreciation Expense - Trabsportation Equipm 4001 1,200,000.00

Accum. Depr. - Transportation Equipment 204-A
To record depreciation for the year.
GENERAL JOURNAL

2011
Dec. 31 Depreciation Expense - Office Equipment 4012 426,000.00
Accum. Depr. - Office Equipment 205-A
Amortization of Organization Cost 4013 200,000.00

Organization Cost 301
To amortize organization cost.
Advertising Expense 4016 550,000.00

Prepaid Advertising 108
To charge used portion.
Insurance Expense 4017 550,000.00

Prepaid Insurance 109
To charge expired portion.
Bad Debts Expense 4014 497,811.00

Allowance for Bad Debts 104-A
To take up bad debts.
Representation Expense 4015 2,000.00

Gasoline Expense 4007 4,600.00
Light, Water and Telephone 4008 1,300.00
Miscellaneous Expense 4018 400.00
Petty Cash 102
To record expenses paid from petty cash.
Accrued Interest Receivable 107 38,853.00

Interest Income 3004
To take up unrecorded interest income.
Interest Expense 4019 66,565.00

Accrued Interest Payable 1007
To take up unrecorded interest expense.
Cost of Sales 4001 1,861,387.00

Merchandise Inventory 106
To record cost of sales for December,
details follow.
Date Sold To Invoice # Amount
2011
Dec. 1 Eagle Contractors 1251 154,545.00
3 Dynasty Construction 1252 2,714.00
7 Sampolio Company 1253 36,364.00
10 Benitez Merchandising 1254
1255 639,427.00
15 Ida Coronel 1256 86,659.00
17 Luli Samson 1257 54,409.00
22 Susan de Leon 1258 127,955.00
23 Building Blocks, Inc. 1259
1260 117,041.00
27 Cora Tayag 1261
1262 181,205.00
29 Conteno, Antonio & Tantoco 1263 461,068.00
1,861,387.00
GENERAL JOURNAL

2011
Dec. 31 Depreciation Expense - Building 4009 650,000.00
Accum. Depr. - Building 202-A
Depreciation Expense - Furniture and Fixture 4010 355,000.00

Accum. Depr. - Furniture and Fixture 203-A
F7.1.2
Page 1
Credit
1,906,500.00
20,000.00
1,600,000.00
470,000.00
21,475.00
5,000,000.00
250,000.00
1,200,000.00
Page 2
Credit
426,000.00
200,000.00
550,000.00
550,000.00
497,811.00
8,300.00
38,853.00
66,565.00
1,861,387.00
Page 3
Amount
154,545.00
2,714.00
36,364.00
639,427.00
86,659.00
54,409.00
127,955.00
117,041.00
181,205.00
461,068.00
1,861,387.00
Credit
650,000.00
355,000.00
COMPLETE SALES BOO
Date Sold To Terms Inv. No. F
12/1 Eagle Contractors 2/10, n/30 1251
12/3 Dynasty Corporation 2/10. n/30 1252
12/7 Sampollo Company 2/10, n/30 1253
12/10 Benitez Merchandising 2/10, n/30 1254
1255
12/15 Ida Coronel 2/10, n/30 1256
12/17 Luli Samson 2/10, n/30 1257
12/22 Susan de Leon 2/10, n/30 1258
12/23 Building Blocks Cash 1259
1260
12/27 Cora Tayag 2/10, n/30 1261
1262
1263
ADJUSTMENTS:
12/30/2011 F2.2 Eagle Contractors Ω C.O.D. 1264
12/30/2011 F2.2 Dynasty Corporation Ω C.O.D. 1265
12/30/2011 F2.2 Benitez Merchandising Ω 2/10, n/30 1266
Total
Legend
F2.2 Obtained from Sales Invoices.
Ω During the conduct of the audit investigation, the audit team has found that the followi
In this case, the following should be noted and adjusted to avoid understatement of sa
F7.1.2 Cost of sales obtained from General journal (page 3)
F71.1 Cost of sales computed from unrecorded sales invoice
Ф Total cost of sales occurred for December 2011 obtained from General ledger and adjusted for the c
OMPLETE SALES BOOK
Accounts ReceivableCash Sales Credit Sales Credit Output Tax TOTAL SALE
246,825 224,386 22,439 246,825
4,625 4,205 420 4,625
58,035 52,759 5,276 58,035
711,950 647,227 64,723 711,950
309,525 281,386 28,139 309,525
138,285 125,714 12,571 138,285
86,850 78,955 7,895 86,850
204,475 185,886 18,589 204,475
75,805 68,914 6891 75,805
111,395 101,268 10127 111,395
208,600 189,636 18964 208,600
81,275 73,886 7389 81,275
736,000 669,091 66909 736,000
2,786,445 187,200 2,703,313 270,331 2,973,645
165,550 150,500 15050 165,550

186,250 169,318 16932 186,250
232,000 210909 21091 232,000
3,018,445 539,000 3,234,040 323,404 3,557,445
, the audit team has found that the following sales were not recorded.
nd adjusted to avoid understatement of sales and cost of sales.
ed from General ledger and adjusted for the cost of unrecorded sales.
F7.2
TOTAL COST OF SALE
F7.1.2 154,545.00
F7.1.2 2,714.00
F7.1.2 36,364.00
F7.1.2
639,427.00
F7.1.2
F7.1.2 86,659.00
F7.1.2 54,409.00
F7.1.2 127,955.00
F7.1.2
117,041.00
F7.1.2
F7.1.2
F7.1.2 181,205.00
F7.1.2 461,068.00
F7.1.2 1,861,387.00
F7.1.1 103,409.09
F7.1.1 114,181.00
F7.1.1 145,455.00
2,224,432.09
PURCHASE CUTOFF SCHED
December 31, 2011
Purchase Date Supplier Terms
Invoice
135 12/15/11 Genius Paper Products n/30 F1.1

117 12/16/11 Arboleda Co., Inc. 2/10, n/45 F1.1
1095 12/18/11 Sapphire Corporation n/30 F1.1
140 12/20/11 Genius Paper Products 2/10, n/45 F1.1
120 12/21/11 Arboleda Co., Inc. n/30 F1.1
P 2,500 down, bal.
147 12/26/11 Genius Paper Products n/15 F1.1
825 12/30/11 Arboleda Co., Inc. n/30 F2.3
CUTOFF SCHEDULE
mber 31, 2011
Merchandise Should be
Amount Input Tax Purchase already
Inventory included
(Accounts Payable) recorded ? in Dec. 31, 2011
13,250.00 12,045.00 1,205.00 YES YES

85,000.00 77,273.00 7,727.00 YES YES
85,000.00 77,273.00 7,727.00 YES YES
127,875.00 116,250.00 11,625.00 YES YES
5,000.00 4,545.00 455.00 YES YES
130,000.00 118,182.00 11,818.00 YES YES
12,250.00 11,136.00 1,114.00 YES YES
25,750.00 23,409.00 2,341.00 YES YES
45,000.00 40,909.00 4,091.00 YES YES
13,325.00 12,114.00 1,211.00 YES YES
165,000.00 150,000.00 15,000.00 YES YES
19,125.00 17,386.00 1,739.00 YES YES
252,250.00 229318 22932 NO YES
155600 141455 14145 NO YES
84250 76591 7659 NO NO
F7.3
DIFFERENCE
(Adjustments in
Inventory)
229,318.00
141,455.00
COMPLETE PURCHASE BOOK
INV.
DATE PURCHASED FROM TERMS F
NO.
2011
Dec. 1 Arboleda Co., Inc. 2/10, n/30 101
2 Genius Paper Products P 300,000 down.
bal. 2/10, n/45 111
3 Sapphire Corporation 2/10, n/30 1082
6 Genius Paper Products 27% - 150 day note 127
15 Genius Paper Products n/30 135
16 Arboleda Co., Inc. 2/10, n/45 117
24 Arboleda Co., Inc. 1/10, n/20 127
P 2,500 down, bal.
26 Genius Paper Products 147
n/15
29 Arboleda Co., Inc. 1/10, n/15 130
ADJUSTMENTS:
29 F2.3 Genius Paper Products ¤ 2/10, n/30 7729
30 F2.3 Arboleda Co., Inc. ¤ n/30 825
Total
F2.3 Obtained from purchase invoice
¤ During the conduct of the audit investigation, the audit team has found tha
the following should be noted and adjusted to av
Reflected
P1 in the Recomputation of Vat Payable
OOK F7.4
ACCOUNTS MERCHANDISE
CR. DR. INPUT TAX DR.
PAYABLE INVENTORY
413,750.00 376,136.00 37,614.00

- -
1,425,000.00 1,295,455.00 129,545.00
459,600.00 417,818.00 41,782.00
1,600,000.00 1,454,545.00 145,455.00
34,200.00 31,091.00 3,109.00
87,500.00 79,545.00 7,955.00
1,250,000.00 1,136,364.00 113,636.00
14,000.00 12,727.00 1,273.00
13,250.00 12,045.00 1,205.00
85,000.00 77,273.00 7,727.00
85,000.00 77,273.00 7,727.00
127,875.00 116,250.00 11,625.00
5,000.00 4,545.00 455
130,000.00 118,182.00 11,818.00
12,250.00 11,136.00 1,114.00
25,750.00 23,409.00 2,341.00
45,000.00 40,909.00 4,091.00
13,325.00 12,114.00 1,211.00
165,000.00 150,000.00 15,000.00
19,125.00 17,386.00 1,739.00
6,010,625.00 5,464,203.00 546,422.00
252,250.00 229,318.00 22,932.00

155,600.00 141,455.00 14,145.00
6,418,475.00 5,834,976.00 583,499.00 P1
udit team has found that the following purchases were not recorded. In this case,
oted and adjusted to avoid understatement of Inventory.
December 3
ANALYTICAL PR
Audit Objectives
2. To obtain evidential matter about particular assertions related to account balances
Audit Procedures
1. Compare account balances in purchases, inventories and costs of goods sold accoun
or deviations from trends.
2. Consider computing the following rations and comparing to the prior year or years t
a. Inventory classifications (raw materials, work-in-process, finished goods)
b. Gross margin at the financial statement level and by-product line.
c. Inventory turnover at the financial statement level by product line.
Findings
Horizontal Analysis
Account No Account Title ###

106 Merchandise Inventory TB 900,000.00
Total 900,000.00
Financial Ratio Analysis
Inventory Turnover 2010

Net Sales 53,439,000.00 #
Beginning Inventory TB 700,000 TB
Ending Inventory TB 900,000 F8
Total 1,600,000
Average ÷2 ÷
Average Inventory 800,000.00 800,000.00
Inventory Turnover 66.79875
Days Sale 2010

Days in a year 360
Inventory turnover ÷ 66.79875
Days Sale 5.389322405
Legend
^ The ending inventory is net of 12% VAT traced from the computation found
& Computed as sales, 2011 of P112,152,313.00 less sales discount of P866,43
# Computed as sales, 2010 of P54,539,000.00 less sales discount of P300,000
Conclusion
1. Information gathered shows that the ending balance of merchandise inventory for t
evidenced by the decrease in inventory turnover and increase in days sales of invento
2. Days sale of inventory has increased by 50.88% from the previous year. Data gathe
A lower turnover rate and a higher days sale of inventory may indicate that managem
this.
December 31,2011
t of other auditing procedures.

to account balances or classes of transactions.
the final review stage of the audit.
s of goods sold accounts with the preceding year or years. Investigate significant changes in amounts
e prior year or years to evaluate the reasonableness of all assertions:
by-product line.
by product line.
December 2011 Variance % Change

F8 4,080,120.54 ^ 3,180,120.54 353.35%
4,080,120.54 3,180,120.54 353.35%
2011
110,244,403.00 & 56,805,403.00 106.30%
900,000.00
4,080,120.54
4,980,120.54
÷2 ÷
2,490,060.27 2,490,060.27 1,690,060.27 211.26%
44.273789003509 -22.52 -33.72%
2011
360
÷ 44.273789003509
8.1312218380828 2.74 50.88%
he computation found on F2.4.

es discount of P866,435.00 and sales returns and allowances of P1,041,475.00
s discount of P300,000.00 and sales returns and allowances of P800,000.00
handise inventory for the period has increased by roughly 28% from the previous years. This is
days sales of inventory.
vious year. Data gathered also shows that inventory turnover has decreased by 33.72% for the period.
dicate that management has been ineefficient in its operation. Overstocking is a possible culprit for
F8
significant changes in amounts

1,475.00
00.00
e previous years. This is
eased by 33.72% for the period.

ocking is a possible culprit for
Prepared byDate:
MRL 2/12/2012
Reviewed byDate:
SSM 2/12/2012
SUMMARY OF RECALCULATION O
Findings
Stock (Nov 30) (PI) (SI) Adjusted Balance

card no. Beginning Received Issued per stock card
1001 200 5,000 (2840) F2 2,360 F2.3
1002 100 5,500 (1920) F2 3,680 F2.3
1003 500 9,000 (5140) F2 4,360 F2.3
1004 4,000 11,500 (7000) F2 8,500 F2.3
1005 5,000 11,500 (7000) F2 9,500 F2.3
1006 200 250 (200) F2 250 F2.3
1007 100 15,000 (2550) F2 12,550 F2.3
1008 200 13,500 (3500) F2 10,200 F2.3
1009 100 17,000 (2700) F2 14,400 F2.3
1010 200 15,000 (3050) F2 12,150 F2.3
1011 100 7,500 (3750) F2 3,850 F2.3
1012 200 9,500 (5900) F2 3,800 F2.3
1013 200 6,050 (3450) F2 2,800 F2.3
1014 300 3,000 (1440) F2 1,860 F2.3
1015 500 2,250 (1150) F2 1,600 F2.3
1016 100 5,000 (3800) F2 1,300 F2.3
1017 300 750 (450) F2 600 F2.3
1018 100 600 (370) F2 330 F2.3
1019 1,000 2,500 (1700) F2 1,800 F2.3
1020 600 2,000 (1350) F2 1,250 F2.3
1021 150 350 (210) F2 290 F2.3
1022 200 350 (250) F2 300 F2.3
1023 600 2,450 (2290) F2 760 F2.3
1024 200 450 (290) F2 360 F2.3
1025 600 1,850 (1620) F2 830 F2.3
1026 50 800 (700) F2 150 F2.3
1027 2,000 4,000 (2550) F2 3,450 F2.3
1028 7,000 6,000 (2400) F2 10,600 F2.3
1029 1,500 5,000 (3050) F2 3,450 F2.3
TOTAL 117,330
Legend
F2.3 Obtained from
^ Adjusted Ending Inventory minus 12% Input VAT
> Adjusted Ending Inventory * 10/110
+ Ending Inventory minus 10% Input VAT
< Adjusted Ending Inventory * 12/112
= 10% Input VAT minus 12% Input VAT
$ Adjusted Stock Card Balance * Unit Price
@ Issued * Unit Price
* Footed and cross-footed
ECALCULATION OF COST OF GOODS SOLD AND ENDING INVENTORY
Unit price Adjusted Cost @ Adjusted Ending $

of Goods Sold Inventory
70.00 (198,800.00) 165,200.00
90.00 (172,800.00) 331,200.00
8.50 (43,690.00) 37,060.00
8.50 (59,500.00) 72,250.00
8.50 (59,500.00) 80,750.00
103.00 (20,600.00) 25,750.00
50.00 (127,500.00) 627,500.00
50.00 (175,000.00) 510,000.00
50.00 (135,000.00) 720,000.00
50.00 (152,500.00) 607,500.00
15.00 (56,250.00) 57,750.00
30.00 (177,000.00) 114,000.00
130.00 (448,500.00) 364,000.00
110.00 (158,400.00) 204,600.00
8.50 (9,775.00) 13,600.00
17.50 (66,500.00) 22,750.00
145.00 (65,250.00) 87,000.00
57.00 (21,090.00) 18,810.00
2.50 (4,250.00) 4,500.00
3.50 (4,725.00) 4,375.00
35.00 (7,350.00) 10,150.00
40.00 (10,000.00) 12,000.00
22.50 (51,525.00) 17,100.00
100.00 (29,000.00) 36,000.00
20.50 (33,210.00) 17,015.00
12.00 (8,400.00) 1,800.00
32.50 (82,875.00) 112,125.00
27.50 (66,000.00) 291,500.00
1.00 (3,050.00) 3,450.00
1,298.50 (2,448,040.00) 4,569,735.00
ND ENDING INVENTORY
Input tax (10%) > Input tax (12%) < DIFFERENCE =
15,018.18 17,700.00 2,681.82

30,109.09 35,485.71 5,376.62
3,369.09 3,970.71 601.62
6,568.18 7,741.07 1,172.89
7,340.91 8,651.79 1,310.88
2,340.91 2,758.93 418.02
57,045.45 67,232.14 10,186.69
46,363.64 54,642.86 8,279.22
65,454.55 77,142.86 11,688.31
55,227.27 65,089.29 9,862.01
5,250.00 6,187.50 937.50
10,363.64 12,214.29 1,850.65
33,090.91 39,000.00 5,909.09
18,600.00 21,921.43 3,321.43
1,236.36 1,457.14 220.78
2,068.18 2,437.50 369.32
7,909.09 9,321.43 1,412.34
1,710.00 2,015.36 305.36
409.09 482.14 73.05
397.73 468.75 71.02
922.73 1,087.50 164.77
1,090.91 1,285.71 194.81
1,554.55 1,832.14 277.60
3,272.73 3,857.14 584.42
1,546.82 1,823.04 276.22
163.64 192.86 29.22
10,193.18 12,013.39 1,820.21
26,500.00 31,232.14 4,732.14
313.64 369.64 56.01
415,430.45 489,614.46 74,184.01
F8 A
Ending Inventory + Ending Inventory ^
(10% vat) (12% VAT)
150,181.82 147,500.00
301,090.91 295,714.29
33,690.91 33,089.29
65,681.82 64,508.93
73,409.09 72,098.21
23,409.09 22,991.07
570,454.55 560,267.86
463,636.36 455,357.14
654,545.45 642,857.14
552,272.73 542,410.71
52,500.00 51,562.50
103,636.36 101,785.71
330,909.09 325,000.00
186,000.00 182,678.57
12,363.64 12,142.86
20,681.82 20,312.50
79,090.91 77,678.57
17,100.00 16,794.64
4,090.91 4,017.86
3,977.27 3,906.25
9,227.27 9,062.50
10,909.09 10,714.29
15,545.45 15,267.86
32,727.27 32,142.86
15,468.18 15,191.96
1,636.36 1,607.14
101,931.82 100,111.61
265,000.00 260,267.86
3,136.36 3,080.36
4,154,304.55 4,080,120.54 *
COMPUTATION OF ENDING INVENTO
(Nov 30) (PI) (SI)

Stock No.
Beginning Received Issued
1001 200 5,000 (2840)
1002 100 5,500 (1920)
1003 500 9,000 (5140)
1004 4,000 11,500 (7000)
1005 5,000 11,500 (7000)
1006 200 250 (200)
1007 100 15,000 (2550)
1008 200 13,500 (3500)
1009 100 17,000 (2700)
1010 200 15,000 (3050)
1011 100 7,500 (3750)
1012 200 9,500 (5900)
1013 200 6,050 (3450)
1014 300 3,000 (1440)
1015 500 2,250 (1150)
1016 100 5,000 (3800)
1017 300 750 (450)
1018 100 600 (370)
1019 1,000 2,500 (1700)
1020 600 2,000 (1350)
1021 150 350 (210)
1022 200 350 (250)
1023 600 2,450 (2290)
1024 200 450 (290)
1025 600 1,850 (1620)
1026 50 800 (700)
1027 2,000 4,000 (2550)
1028 7,000 6,000 (2400)
1029 1,500 5,000 (3050)
TOTAL 26,300.00 ### (72,620.00)
Adjustments:
a After obtaining the correct balance in Ending Inventory, the balance before adjustme
Ledger states otherwise: P 4, 397,125.75. Thus, a proposed adjusting entry for reflec
respectively.
PAJE 1 Inventory Shrinkage

To record inventory shrinkage.
2 Allowance for Inventory Write-Down

To reduce allowance for inventory write
Legend
F7 Obtained from Inventory Cut-Off
F1 Obtained from Agree General Ledger and Subsidiary Ledger
OF ENDING INVENTORY
(Dec 31)
Unit Price Total Price Input VAT
Ending Balance
2,360 70.00 165,200.00 15,018.18
3,680 90.00 331,200.00 30,109.09
4,360 8.50 37,060.00 3,369.09
8,500 8.50 72,250.00 6,568.18
9,500 8.50 80,750.00 7,340.91
250 103.00 25,750.00 2,340.91
12,550 50.00 627,500.00 57,045.45
10,200 50.00 510,000.00 46,363.64
14,400 50.00 720,000.00 65,454.55
12,150 50.00 607,500.00 55,227.27
3,850 15.00 57,750.00 5,250.00
3,800 30.00 114,000.00 10,363.64
2,800 130.00 364,000.00 33,090.91
1,860 110.00 204,600.00 18,600.00
1,600 8.50 13,600.00 1,236.36
1,300 17.50 22,750.00 2,068.18
600 145.00 87,000.00 7,909.09
330 57.00 18,810.00 1,710.00
1,800 2.50 4,500.00 409.09
1,250 3.50 4,375.00 397.73
290 35.00 10,150.00 922.73
300 40.00 12,000.00 1,090.91
760 22.50 17,100.00 1,554.55
360 100.00 36,000.00 3,272.73
830 20.50 17,015.00 1,546.82
150 12.00 1,800.00 163.64
3,450 32.50 112,125.00 10,193.18
10,600 27.50 291,500.00 26,500.00
3,450 1.00 3,450.00 313.64
117,330.00 1,298.50 4,569,735.00 415,430.45
F7 Unrecorded Sales
F7 Unrecorded Purchases
Balance before adjustments
F1 Balance after agreeing General Ledger and

Subsidiary Ledger
Difference
Inventory Shrinkage
Inventory Writedown
ory, the balance before adjustments should be P4,146,575.55. However, the balance after agreeing th
roposed adjusting entry for reflecting the inventory write down and shrinkage should be made in the o
6,350.00
andise Inventory 6,350.00
ord inventory shrinkage.
ory Write-Down 244,199.20

andise Inventory 244,199.20
ce allowance for inventory write-down.
F8B
Net of VAT
150,181.82
301,090.91
33,690.91
65,681.82
73,409.09
23,409.09
570,454.55
463,636.36
654,545.45
552,272.73
52,500.00
103,636.36
330,909.09
186,000.00
12,363.64
20,681.82
79,090.91
17,100.00
4,090.91
3,977.27
9,227.27
10,909.09
15,545.45
32,727.27
15,468.18
1,636.36
101,931.82
265,000.00
3,136.36
4,154,304.55
103,409.00
114,181.00
145,455.00
(229,318.00)
(141,455.00)
4,146,576.55
eneral Ledger and

4,397,125.75
250,549.20
(6,350.00)
244,199.20 a
the balance after agreeing the General Ledger and Subsidiary

kage should be made in the of P 244,199.20 and P 6,350.00,
December
a
BALANCE BALANCE
ACCOUNT NUMBER
ACCOUNT NAME
WP REF.
2009 2010
108 Prepaid Advertising G 50,000.00 120,000.00
109 Prepaid Insurance G 60,000.00 80,000.00
110 Unused Supplies G 200,000.00 300,000.00
TOTAL 310,000.00 500,000.00
December 31,2011
ASSETS G
UNADJUSTED PAJE AUDITED
DIFFERENCE % CHANGE
BALANCE 2011 Debit Credit BALANCE
50,000.00 0.00 0.00 50,000.00 (70,000.00) -58.33%
50,000.00 0.00 0.00 50,000.00 (30,000.00) -37.50%
300,000.00 0.00 0.00 300,000.00 0.00 0.00%
400,000.00 0.00 0.00 400,000.00 ### -20.00%
s
RECOMPUTATION O
Audit Objectives
1. To determine that changes to prepayments represent amounts that are reasonably
2. To determine that prepayments are recorded properly.
Assertions Affected
1. Existence
2. Accuracy
Audit Procedures
1. Perform tests of mathematical computations to the extent deemed necessary.
2. Determine reasonableness of the amounts.
3. Inquire management for any differences found.
Findings
Amount
RECONCILIATION: per
Schedule Vouched
Date Particulars
of Amounts
Advertisin
Advertisement in Bulletin g
### G1.1 250,000.00 250,000.00
Today
### Retainer Fee G1.1 350,000.00 350,000.00
Advertisement -Times
8/20/11 G1.1 257,195.00 257,195.00
12/31/1 Journal
Brochures G1.1 100,000.00 C2.4 13,325.00 a
1
TOTAL 957,195.00 ###
RECOMPUTATION:
Date Cap
Particulars
Advertisement in Bulletin Prepa
G1.1 02/15
Today
G1.1 Retainer Fee 07/01
G1.1 Brochures N
G1.1 Advertisement -Times Journal N
TOTAL:
RECONCILIATION: Amount
per
Schedule Vouched
Particulars
of Amounts
Premium on insurance of Advertisin
Premium on insurance of G1.1 360,000.00
g 360,000.00
delivery vans
building and equipment G1.1 240,000.00 240,000.00
and fixtureTOTAL G1.1 600,000.00 ###
RECOMPUTATION:
Payee
Cardinal Particulars
Premium on insurance o
G1.1 Insurance
vans
Corporation
Filipino Insurance Premium on insurance of b
G1.1 Corporation equipment and fix
TOTAL:
RECONCILIATION:
Legend
TB Traced from Trial Balance as of December 31, 2011
G1.1 Traced from Schedule of Assets (Advertising and Insurance)
VB1 Traced from VB1 Recomputation of Operating Expenses
a There was no supporting document indicating payment of brochures to Franks
audit, the auditors found out that only advertising expenses amounting to P 1
Reconciliation of prepayments was done in order to determine if the ending ba
assumed that this is the only prepayment transaction for the month of Decem
prepaid advertising since the ending balance resulted to a negative amount o
Reconciliation of prepayments
However this amount does not was done
affect the in order balance
ending to determine if theadvertisin
of prepaid ending ba
b prepaid
the year.insurance sincethe
Hence, since theending
endingbalance
balanceofresulted
prepaid to an amount
advertising is of P130,00c
correctly
this
It is assumed that supplies purchased are expensed immediately. When the
amount does not affect the ending balance of prepaid insurance for the cu
a
c Hence, since
Supplies the ending
Expense shown balance of prepaid insurance
on the Preliminary is correctly
Trial Balance are also computed,
purchases o n
d the General Ledger of Supplies Expense are equal.
In order to ascertain the existence, accuracy and rights and obligations, the audit team
Conclusion
investigation, it has come to the auditor's attention that recomputation of prepayment
auditors' professional judgment that prepaid advertising and prepaid supplies carried f
prepaid insurance carried forward at the beginning of the period is not actually charge
the portion of the asset expired is properly accounted for. The prepayments classified
December 31,2011
OMPUTATION OF PREPAYMENTS AND OTHER CURRENT ASSETS
that are reasonably expected to be realized through future operations.
ed, and adequate disclosures have been made.
med necessary.
Account No. 108 - Prepaid Advertising

Begining Balance Prepayments Expenses
TB 120,000.00
-
350,000.00
257,195.00
13,325.00
120,000.00 620,520.00 VB1 820,520
Prepaid
Date Capitalized as Manner of Recognition of
Advertising,
Prepayment Expense
02/15/2010 For 1 year from 01/15/2011 Nov 30
250,000.00
Amortized for 7 mons. until
07/01/2011 350,000.00
01/31/12
N/A In Full on 12/31/2011 -
N/A In Full on 08/21/2011 -
Account No. 109 - Prepaid Insurance
Begining Balance Prepayments Expenses
TB 80,000.00
360,000.00
240,000.00
80,000.00 600,000.00 VB1 550,000.00
Prepaid Insurance, Nov

Particulars Term Effective Date
mium on insurance on delivery One 30
01.01.2011 360,000.00
vans year
ium on insurance of building and One
03.15.2011 240,000.00
equipment and fixture year
Account No. 110 - Unused Supplies

Unused
Begining Balance Expenses
Supplies
TB 300,000.00 VB1 1,411,862.00 d VB1 ### d
f brochures to Franks Digital amounting to P 100,000 and it was not also reflected on the general ledge
ses amounting to P 13,325 supported by CV No. 317, was recorded subsequent to November 30 transa
mine if the ending balance equals the balance in the general ledger. However, there was an inconsiste
the month of December since there were no other supporting documents other than the CV No. 317.
a negative amount of P80,000, which means that there was an understatement in the beginning balan
mine
of if theadvertising
prepaid ending balance equals
for the theyear
current balance in theit general
because ledger.accounted
was correctly However, forthere wasrecomputation
in the an inconsiste
nertising
amount is of P130,000,
correctly which means
computed, that there are
no adjustments wasnecessary.
an overstatement in the beginning balance amoun
d insurance for the current year because it was correctly
ediately. When the auditors examined the Cash Disbursements accounted
Book,forsupplies
in the recomputation
purchased were of expens
prepaid
correctly
are also computed,
purchases of notsupplies.
adjustments areno
Hence, necessary.
adjustment is needed for supplies since the audited amount
ations, the audit team conducted a recomputation of prepayments and other current assets. During the
ation of prepayments differs from the amount stated in the preliminary trial balance. After much consu
aid supplies carried forward at the beginning of the peiod are actually chargeable to the operations of
s not actually chargeable to the operation of the future periods. The prepayments of the current year a
payments classified and presented in the statement of financial position are properly accounted for.
G1
Ending Balance
Ending
per General Difference
Balance
Ledger
-80,000.00 50,000.00 -130,000.00 b
Prepaid
Expired Advertising
Advertising,
Portion Expense 2011
12/12 250000 Dec
0.0031
6/7 300000 50,000.00
1/1 - -
1/1 - -
50,000.00
Ending Balance
Ending
per General Difference
Balance
Ledger
130,000.00 50,000.00 80,000.00 c
Prepaid
Expired Insurance
Advertising,
Portion Expense 2011
12/12 360,000.00 Dec
0.00 31
285/360 190,000.00 50,000.00
50,000.00
Recomput Ending Balance

Difference/
ed Ending per General
Adjustment
Balance
300,000.00 Ledger
300,000.00 0.00
cted on the general ledger. During the conduct of the

nt to November 30 transactions. The auditors
r, there was an inconsistency in the presentation of
er than the CV No. 317.
nt in the beginning balance amounting to P130,000.
r, for
d there wasrecomputation
in the an inconsistency in the presentation
of prepaid of
advertising for
beginning balance amounting to P80,000. However
srecomputation
purchased were of expensed
prepaid insurance for the
immediately. year. the
Hence,
since the audited amount and the amount shown on
current assets. During the conduct of the audit

balance. After much consultation, it has come to the
able to the operations of future periods. However, the
ents of the current year are properly accounted and
properly accounted for.
Prepared by: Date:

ARC 2/13/2012
Reviewed by: Date:
SFR 2/14/2012
SCHEDULE OF PREPAYMENTS
GRACE CORPORATION
Advertising
For the Year Ended December 31,2011
Date CV# Payee Particulars

02.15.2003 Catchy Ads, Inc. Advertisement in Bulletin Today
Published 01.15.2011
06.15.2011 Catchy Ads, Inc. Retainer fee for seven months effective
July 1 , 2011
TOTAL
08.20.2011 Advertisement - Times Journal
08.21.2011
12.31.2011 Brochures
GRACE CORPORATION
Insurance
For the Year Ended December 31,2011
Date CV# Payee Particulars

01.02.2011 Cardinal Insurance Premium on insurance of delivery
Corporation vans for one year effective 01.01.2011
03.12.2011 Filipino Insurance Premium in insurance of building

Corporation and equipment and fixture for
one year effective 03.15.2011
(Pol.# 279825)
G1.1
2011
Amount
P 250,000.00
350,000.00
P 600,000.00
257,195.00
100,000.00
P 957,195.00
2011
Amount
P 360,000.00
240,000.00
P 600,000.00
December 31,2011
REVIEW OF OTHER IMPORTANT MATTERS
Audit Objectives
Assertions Affected
Audit Procedures
1. Examine supporting documentation.
2. Determine the nature of the accounts.
Findings
There was no other supporting documents except for Cash Voucher 317 amounting to
payment for P100,000 brochures has no supporting documents. An explanation from t
this matter needs to be obtain. Unless explanation is given, no adjustments are needed
Conclusion
2011
RTANT MATTERS G2
ed, and adequate disclosures have been made.
er 317 amounting to P13,325. Further, the

An explanation from the management regarding
djustments are needed.
Prepared byDate:
ARC 2/13/2012
Reviewed by
Date:
SFR 2/14/2012
ACCOUNT NUMBER ACCOUNT NAME
201 Land
202 Building
202-A Accumulated Depreciation - Building
203 Furniture and Fixture
203-A Accumulated Depreciation - Furniture and Fixture
204 TransportationDepreciation
Accumulated Equipment - Transportation
204-A Equipment
205 Office Equipment
205-A Accumulated Depreciation - Office Equipment
TOTAL
December 31,2011
LEAD SCHEDULE - PROPERTY, PLANT AND EQUIPMENT
BALANCE BALANCE UNADJUSTED PAJE

WP REF.
2009 2010 BALANCE 2011 Debit
K 16,500,000.00 16,500,000.00 16,500,000.00 0.00
K 33,000,000.00 33,000,000.00 53,000,000.00 0.00
K 0.00 0.00 650,000.00 0.00
K 3,550,000.00 3,550,000.00 3,550,000.00 0.00
K 0.00 0.00 355,000.00 0.00
K 6,000,000.00 6,000,000.00 6,000,000.00 0.00
K 0.00 0.00 1,200,000.00 0.00
K 2,130,000.00 2,130,000.00 2,130,000.00 0.00
K 0.00 0.00 426,000.00 0.00
61,180,000.00 61,180,000.00 78,549,000.00 0.00
2011
LANT AND EQUIPMENT K
PAJE AUDITED
DIFFERENCE % CHANGE
Credit BALANCE
0.00 16,500,000.00 0.00 0.00%
0.00 53,000,000.00 20,000,000.00 60.61%
4,556,081.00 5,206,081.00 5,206,081.00 -%
0.00 3,550,000.00 0.00 0.00%
1,320,000.00 1,675,000.00 1,675,000.00 -%
0.00 6,000,000.00 0.00 0.00%
300,000.00 1,500,000.00 1,500,000.00 -%
0.00 2,130,000.00 0.00 0.00%
626,500.00 1,052,500.00 1,052,500.00 -%
### 71,746,419.00 10,566,419.00 17.27%
December 31,2011
INSPECTION OF PROPERTY, PL
EQUIPMENT
Audit Objectives
1.
2. To determine the
thatquality and obsolency
all property, plant andofequipment
the property, plant
on the and equipment.
statement of financial po
leased under a finance lease) are owned by the entity and held by the entity or by othe
Assertions Affected
1. Existence
Audit Procedures
1. Visit sites and inspect property, plant and equipment stated in the statement of fina
Upon inspection of the Property, Plant and Equipment stated in the Statement of Finan
2.
theCheck for obsolescence
sites where the assets and if so determined,
are situated, remove
it is found item
out that all from the
assets statement
exist and areof
infin
g
No items were determined to be obsolete and fictitious, hence there is no need to rem
The ending balances of Property, Plant and Equipment properly reflects the acquisition
Findings
Plant and Equipment line item in Grace Corporation's Financial Statements. The basis f
Schedule of Property, Plant and Equipment (Refer to K1.1). However, the auditors foun
provided by Grace Corporation's management, K1.1 Schedule of Property, Plant, and E
document, the auditors found out that the component of the line item Furnitures & Fixt
chairs @ P24,000 does not correspond to the total amount of P480,000. Despite this m
Furniture
supporting&documents
Fixture 40 that
office tablets
could & 40prove
clearly officethat
chairs @ aP computation
such 24,000 is indeed erron
P480,000 remains unchanged and unadjusted. This amount is still used for the subsequ
of Grace Corporation.
Legend
a Possible error in computation (refer to K2.1)
Conclusion
The auditors shall use the amount P480,000 in other audit procedures but will inquire t
above. Other than those mentioned, there are no further exceptions noted.
December 31,2011
N OF PROPERTY, PLANT AND
EQUIPMENT
K1
eant and equipment.
statement of financial position (including assets that are
eld by the entity or by others for the entity.
d in the statement of financial position.

in the Statement of Financial Position of Grace Corporation at
l from
assetsthe statement
exist and areof
infinancial position.
good condition for business operations.
e there is no need to remove any component in the Property,
rly reflects the acquisitions and correspond with the provided
al Statements. The basis for inspection is the document
owever, the auditors found out upon inspection of the
e of Property, Plant, and Equipment.
line item Furnitures & Fixtures of 40 office tablets and 40 office
P480,000. Despite this miscalculation, there are no sufficient
omputation CV-6-3 06.02.2003
is indeed erroneous. Therefore, 480,000.00 a of
the total cost
s still used for the subsequent procedures used by the auditors
ocedures but will inquire the management of the findings noted

eptions noted.
Prepared byDate:
CDS 2/14/2012
Reviewed by
Date:
MRL 2/14/2012
Schedule of Plant, Property & Equipment (
Ledger
Classification Description
Land A parcel of land, Lot 4, Blk 2 of the consoli-
dation-subdivision plan PCS 12456 situated
in Sucat, Municipality of Parañaque, Province
of Rizal containing an area of two thousand
(2,000) square meters more or less
Building 2,000 sq.m. concrete building
Additional improvements
Furniture 80 showcases for the store

& Fixture @ P 5,000
40 office tablets & 40 office

chairs @ P 24,000
10 conference tablets with 80

chairs
30 four-drawer steel cabinets
1 office safe fire proof Hobart
50 venetian blinds FineLine
Air-conditioning System
Delivery Isuzu Crewcab
Vans Model 1993, Motor #123456
Chassis #821618
Office 10 Personal Computers

Equipment Pentium 6
SN 41226 SN 41231
41227 41232
41228 41233
41229 41234
41230 41235
Olympia Electric Typewriter

SN 41226
18" Carriage. Model 142C
Olympia Electric Typewriter

SN 528376
12" Carriage. Model 215
10 Electric Fans
SN 15381 SN 15386
15382 15387
15383 15388
15384 15389
15385 15390
Legend
a Reference/supporting documents not available
b Possible error in computation, however supporting documents are unavailable to prove such claim
c Footed
y & Equipment (December 31, 2011)
Reference/ a
Date Cost
CV-11-182 P 16,500,000.00
11.02.2010
CV-11-182 33,000,000.00
11.02.2010
CV-1-5 20,000,000.00
01.05.2011
P 53,000,000.00 c
CV-6-2 400,000.00
06.01.2010
CV-6-3 480,000.00 b
06.02.2010
CV-8-10 600,000.00
08.20.2010
CV-7-10 240,000.00
07.10.2010
CV-7-11 280,000.00
07.11.2010
CV-8-13 320,000.00
08.15.2010
CV-3-16 1,230,000.00
08.18-2010
P 3,550,000.00 c
CV-12-20 P 6,000,000.00
12.20-2003
CV-8-01 2,050,000.00
08.01-2003
CV-8-02 25,000.00
08.01-2003
CV-8-03 25,000.00
08.01-2003
CV-8-03 30,000.00
08.01-2003
P 2,130,000.00 c
lable to prove such claim

K1.1
Estimated Life from
Acquisition Date
20 years
40 years
5 years
10 years
5 years
10 years
10 years
5 years
December 31,2011
VOUCH FOR ACQUISITIONS AND DISP
Audit
1. Objectives
To determine that the gross ending balance of Property, Plant and Equipment in the
acquisitions and disposals made during the year.
Assertions Affected
2. Occurrence
Upon vouching the property, plant and equipment accounts related to the acquisitions
auditors found out that they did not acquire or dispose of any item in the property, pla
Audit Procedures
out that Grace Corporation capitalized a P20 million additional improvements on Janua
1. Vouch for acquisitions and disposals made for Property, Plant and Equipment
K1.1). However, the basis of their capitalization is difficult to ascertain because there w
significantly extended its estimated useful life or has significantly become more efficen
Findings
raised to appropriate management authorities for inquiry. Furthermore, the different re
Property, Plant and
For the purposes of Equipment
conducting cannot be of
this audit appropriately vouchedthe
Grace Corporation, as auditors
such supporting
have concdo
Henceforth,
improvement this issue
made byshall
Gracealso be raised to
Corporation onappropriate management
January 5, 2011 forto
as referred inquiry.
K1.1 is ass
building. Henceforth, its capitalization is deemed in conformity with PAS 16 - Property,
Conclusion
shall be used by the auditors in the following procedures to be conducted for the audit
Equipment. Other than these matters, there were no further exceptions noted.
r 31,2011
IONS AND DISPOSALS K2

d Equipment in the financial statements properly reflect
to the acquisitions and disposals made by Grace Corporation, the

n the property, plant and equipment. However, the auditors found
ovements on January 5, 2011 to the Building account (Refer to
d Equipment
ain because there was no information stating that the building has
ecome more efficent for business operations. This issue should be
ore, the different references shown in the said Schedule of
such supporting
auditors documents
have concluded thatare
theunavailable
P20 millionto the audit.
additional
ent forto
erred inquiry.
K1.1 is assumed to be a major improvement/repair on the
PAS 16 - Property, Plant and Equipment. The new cost of the asset
ucted for the audit of Grace Corporation's Property, Plant and
ions noted.
Prepared by: Date:

CDS 2/15/2012
RAC 2/15/2012
Reviewed by: Date:

MKKRA 2/15/2012
December 31,2011
CHECK PROPER CAPITALIZATION
Audit Objectives
1. To determine that all property, plant and equipment owned or leased under finance
end are included in the statement of financial position.
2. To determine if major repairs made, if any, were properly capitalized to the related P
Assertions Affected
1. Completeness
Audit Procedures
1. Trace supporting documents related to repairs.
2. Examine company policy for capitalization threshhold relating to repairs expenses.
3. Check lease contacts for evidences of finance lease.
Upon conducting the audit for tracing the supporting documents related to repairs and
Grace Corporation, the auditors found out that there were no such documents provided
Findings
management. Therefore the auditors conducted an alternative procedure, which was t
Corporation's Trial Balance for 2011 and it was determined that there were no such lin
working paper.
Since there were no evidences indicating that there were repairs made during 2011 by
Conclusion
auditors conclude that there is no need to capitalize certain expenses as Property, Plan
than those noted above, there were no further exceptions noted.
ber 31,2011
R CAPITALIZATION K3
ned or leased under finance leases by the entity at year-
ly capitalized to the related Property, Plant, and Equipment.
elating to repairs expenses.

ments related to repairs and improvements made by
no such documents provided by the Grace Corporation's
ative procedure, which was the inspection of Grace
d that there were no such line item given in the said
repairs made during 2011 by Grace Corporation, the

in expenses as Property, Plant, and Equipment. Other
noted.
Prepared byDate:
SPR 2/15/2012
AKRC 2/15/2012
Reviewed by
Date:
MRL 2/15/2012
December 31,2011
Audit Objectives
1. To determine that property, plant and equipment and related accounts are properly
disclosed in the financial statements, including notes, in conformity with PFRS.
2. To determine that property, plant and equipment held for disposal are carried at the
amount or fair value less costs to sell.
3. To determine that impaired property, plant and equipment are recorded at estimate
Assertions Affected
3. Valuation
Upon
Auditreview of contracts for pledges, collateralled and guaranteed Property, Plant and
Procedures
found out that as per the confirmation letter obtained from PCI Bank, Grace Corporatio
1. Review contracts for pledged, collateralled, and guaranteed Property, Plant and Equ
for a P10,000,000 loan liability (Refer to C3.1 for the PCI Bank Confirmation Letter). The
2. Disclose
further items as
evidenced bynecessary,
thenoted as required
creditthat
memo by applicable discounted
CA were
4486-9156-80, standards. at 12% with proce
In addition, the auditors there no indications explicitly or otherwise im
C2.2
Plant for
andCash Proceeds).
Equipment line Other
items than those noted
are improperly previously,
classified, there were
described, andno other asset
disclosed. Fur
Findings
land is subject for additional disclosure in Grace Corporation's Notes to the
supporting documents pointing out specific Property, Plant and Equipment accounts th Financial St
no other
Noncurrent assets pledged and/or guaranteed by Grace Corporation.
The auditorsAssets Held For Sale,
also determined thatAgriculture, Investment
the property, plant andProperty, and
equipment ofetc. Hence
Grace thes
Corpora
recorded at the appropriate basis of measurement as prescribed by PFRS 5,
impairment, since there were no information sufficient to conclude that the recoverablPAS 41, PA
standards.
lower than their carrying amounts. Hence the assets shall not be subject to the provisio
of Assets and are not adjusted further. The amounts reflected on the balance sheet is u
procedures
Land held asincollateral
the auditshould
of Property, Plant, and
be properly Equipment.
presented and disclosed in the Notes to Fina
corresponding liability of P10,000,000 is supported by a credit memo and is valued at t
Conclusion
amount. All items under the Grace Corporation's Property, Plant and Equipment are to
in accordance with PAS 16. There were no further exceptions noted.
ber 31,2011
R IMPORTANT MATTERS K4
elated accounts are properly described , classified and
onformity with PFRS.
or disposal are carried at the lower of their carrying
ent are recorded at estimated recoverable amount.
aranteed Property, Plant and Equipment, the auditors

m PCI Bank, Grace Corporation's Land is held as collateral
teed Property, Plant and Equipment.
ank Confirmation Letter). The liability's authenticity is
standards.
discounted at or
12% with proceeds of that
P7,900,000 (Refer to
ons explicitly otherwise implying the Property,
described, and disclosed. Furthermore, there areOnly
y, there were no other assets held as collateral. no the
on's
t andNotes to the accounts
Equipment Financial that
Statements.
should be There were as
classified also
oration.
Property, and
equipment ofetc. Hence
Grace these items
Corporation are do
notnot have for
subject to be
scribed by PFRS 5, PAS 41, PAS 40 and other applicable
conclude that the recoverable amount of the assets are
not be subject to the provisions of PAS 36 - Impairment
cted on the balance sheet is used for the subsequent
disclosed in the Notes to Financial Statements. Its
edit memo and is valued at the proper discounted
Plant and Equipment are to be reported and measured
ons noted.
Prepared byDate:
CDS 2/15/2012
Reviewed by
Date:
AKRC 2/15/2012
Audit Objectives
1. To determine that property, plant and equipment are reported at the appropriate a
2. To determine that the cost of the property, plant and equipment is allocated to the a
Assertions Affected
Audit Procedures
1. Check company policy to ascertain the depreciation method used.
2. Recompute for depreciation used.
3. Adjust for differences.
Findings
1 Prior to the year 2011, the Grace Corporation did not recognize any Accumulated De
amounts to their respective carrying amounts. The related accounts of Depreciation Ex
PAJE 1 Retained Earnings

Depreciation Expense - Building
Depreciation Expense - Furniture and Fixture
Depreciation Expense - Transportation Equipment
Depreciation Expense - Office Equipment
Accumulated Depreciation-Building
Accumulated Depreciation-Furniture and Fixture
To adjust the Depreciation-Transportation
Accumulated beginning balance of Accumulated Deprec
Equipment
and to adjust the the appropriate depreciation
Accumulated Depreciation-Office Equipment expense
period
A parcel of land, Lot 4, Blk 2 of the consolidation-

Computatio
subdivision plan PCS 12456 situated in Sucat,
Municipality of Parañaque, Province of Rizal
PPE Line Items containing an area Description
of two thousand (2,000) Date on CV WP REF.
Land square meters more or less 11.02.2010 K1.1
Building 2,000 sq.m. concrete building 11.02.2010
Additional improvements 01.05.2011
Total K1.1
Furniture & Fixture 80 showcases for the store @ P 5,000 06.01.2010
40 office tablets & 40 office chairs @ P 24,000 06.02.2010
10 conference tablets with 80 chairs 08.20.2010
30 four-drawer steel cabinets 07.10.2010
1 office safe fire proof Hobart 07.11.2010
50 venetian blinds FineLine 08.15.2010
Transportation Air-conditioning System 08.18.2010
Total K1.1
Equipment Isuzu Crewcab 12.20.2010
Model 1993, Motor #123456 Chassis #821618
Total K1.1
Office Equipment 10 Personal Computers 08.01.2010
Pentium 6
SN 41226 SN 41231
41227 41232
41228 41233
41229 41234
41230 41235
Olympia Electric Typewriter 08.01.2010
SN 41226
18" Carriage. Model 142C
Olympia Electric Typewriter 08.01.2010
SN 528376
12" Carriage. Model 215
10 Electric Fans 08.01.2010
SN 15381 SN 15386
15382 15387
15383 15388
15384 15389
15385 15390
Total K1.1
TOTAL
Legend
K1.1 The amounts used in computing for the depreciation are based on the amounts found in proc
K5.1 The estimated useful life used is based on the Commision on Audit's supporting document (R
a Computed by dividing acquisition cost over the estimated useful life of the asset multiplited b
The dates given on the Cash Voucher Reference (Refer to supporting docum
1 For the purpose
operations whichofmost
conducting
probablythe auditon
began of July
depreciation for Grace
1, 2009. Based Corpora
on the supp
2 property, plant and equipment are primarily used for business operations a
b The amounts given are computed by adding the Adjusted Accumulated Depreciation- 12/31/2
c Annual Depreciation Expense is computed by dividing the cost of th non-current asset by its e
d Accumulated Depreciation for 12/31/2011 is computed by adding the Accumulated Deprecia
e The computation of Depreciation Expense for the Building in 2011 is shown below:
Acquisition Cost 33,000,000

Accumulated Depreciation, 12/31/2010 2,475,000
Carrying Amount, 12/31/2010 30,525,000
Additional Improvement, 1/5/2011 20,000,000
Total Carrying Amount, 1/5/2011 * 50,525,000
Divide by Remaining Useful Life in Years ** 18.5
Depreciation Expense - Building, 2011 2,731,081
f Computed by subtracting the aggregate amount of accumulated depreciation for non-current

1 Amounts used in PAJE 1.
It
In has also come
congruence to to the
the attention
past of the auditors
four procedures,it has that
comethere were
to the no recognized
auditors' attentionAccumu
that th
be misstatements
Conclusion
searched for the bestin the assets' carrying
estimation of usefulamounts. In order to
life and gathered conform
data withCommission
from the the PAS 16
procedure
comparisonresulted
with thetosaid
adjustments on thethis
data gathered, Accumulated
estimated Depreciation
useful life was- Building,
reduced toAccum
10 y
Expense by adjusting the Carrying Amount of the Property, Plant and Equipment at the
carrying amount is then used as the basis for computing the Depreciation Expense an
adjustment of P 6,802,581. The Retained Earnings was also adjusted by P 5,011,500 a
With the proposed adjusting entries, the resulting net carrying amount of the Property
Equipment - P4,500,000, Office Equipment - P1,077,500.
Pertaining to the misstatements made by Grace Corporation in its 2009 Financial State
applicable standards. The same should be done for the 2010 Financial Statements.
Other than the adjusting entries noted above, there were no further exceptions noted.
December 31, 2011
RECOMPUTATION OF DEPRECIAT
at the appropriate amount.

t is allocated to the appropriate periods in a systematic and rational manner.
any Accumulated Depreciation in its Statement of Financial Position, thus overstating the property, pla
ts of Depreciation Exoense and Accumulated Depreciation are also adjusted to reflect the correct amo
2,380,499.92 1
2,731,081.08
670,000.00
ion Equipment -600,000.00
-421,000.00
4,556,081.00
e and Fixture 1,320,000.00
Accumulated
rtation Depreciation
Equipment 300,000.00
epreciation
quipment expense for the 626,500.00
mputation for Depreciation Expense And the B

Cost Est. Useful Life from Date Adjusted Accumulated
12/31/2011 WP REF. of Acquisition Depreciation - 12/31/2009
16,500,000 K1.1 N/A N/A
33,000,000 K1.1 20 years a 825,000 b
20,000,000 K1.1
53,000,000 825,000
400,000 K5.1 10 years a 20,000 b
480,000 K1.1 5 years a 48,000 b
600,000 K5.1 5 years a 60,000 b
240,000 K5.1 5 years a 24,000 b
280,000 K5.1 5 years a 28,000 b
320,000 K5.1 5 years a 32,000 b
1,230,000 K5.1 5 years a 123,000 b
3,550,000 335,000
6,000,000 K1.1 10 years a 300,000 b
6,000,000 300,000
2,050,000 K1.1 5 years a 205,000 b
25,000 K1.1 10 years a 1,250 b
25,000 K1.1 10 years a 1,250 b
30,000 K1.1 5 years a 3,000 b
2,130,000 210,500
81,180,000 1,670,500
the amounts found in procedure K1.1 Schedule of Plant, Property & Equipment (December 31, 2011).
's supporting document (Refer to K5.1).
fe of the asset multiplited by passage of time. During the course of computing the accumulated depreciation and depreciation expense, th
(Refer to supporting document K1.1) are not used as a basis for acquisition date because on the 2009 trial balance,the amounts of the Pr
eciation
1, for Grace
2009. Based Corporation,
on the supportingitdocument
is assumedK5.3
thatOrganizational
the management has
Cost, thea company policythat
auditors noted of assuming that acquisitions
salaries were which
paid as of July are made
30, 2009 fo
represe
ed for business operations and there is no sufficient data for knowing the exact acquisition date, July 1, 2009 is the most probable date.
ated Depreciation- 12/31/2009 and the respective depreciation charges for the year 2010.
h non-current asset by its estimated useful life. The expense given represents the entire depreciation expense for the year.
the Accumulated Depreciation of 12/31/2010 and the computed depreciation expense for 2011.
is shown below:
The lapse of 5 days (12/31/10 to 1/5/2011) is considered immaterial to the computation of

* building's carrying amount.
** Remaining Useful Life is computed by:
Total Useful Life in Years
Years Used - July 1, 2009 to December 31, 2010
Remaining Useful Life in Months
epreciation for non-current assets of Grace Corporation less the recorded accumulated depreciation as of 2011 as shown on the prelimina
oors'
recognized
attentionAccumulated Depreciation
that there were prior
items in the to 2011 when
Furnitures thereaccounts
& Fixtures were already amounts
without of Property,
estimations Pl
of usefu
ormthe
rom withCommission
the PAS 16 on
- Property,
Audit forPlant andreliable
a more Equipment and toThe
reference. testyears
the valuation
identifiedand allocation
were assertion
subsequently use
on - Building, Accumulated Depreciation - Furnitures & Fixture, Accumulated Depreciation- Transportat
was reduced to 10 years and was also used in computing for its depreciation expense. This item was t
nd Equipment at the start of the year. This was done by reflecting the acquisition dates, estimated use
eciation Expense and the Accumulated Depreciation using the straight-line method of depreciation for
ed by P 5,011,500 and Depreciation Expense was adjusted by P1,791,081.
ount of the Property, Plant, and Equipment to be shown in Grace Corporation's Statement of Financial
2009 Financial Statements, a disclosure should be given by Grace Corporation and release the correct
ncial Statements.
er exceptions noted.
ber 31, 2011
ON OF DEPRECIATION
verstating the property, plant and equipment of the entity. Therefore, we need to recognize an Accum
d to reflect the correct amount.
These amounts were computed by the following:

For Depreciation Expense:
Appropriate Depreciation Expense, 2011 4,422,081.00
Recorded Depreciation Expense, 2011 2,631,000.00
Depreciation Expense, PAJE 1 1,791,081.00
For Accumulated Depreciation - Building:
Appropriate Accumulated Depreciation Expense - Building, 2011 5,206,081.00
Recorded Accumulated Depreciation - Building, 2011 650,000.00
Accumulated Depreciation - Building, PAJE 1 4,556,081.00
For Accumulated Depreciation - Furniture and Fixture:

Appropriate Accumulated Depreciation - Furniture and Fixture, 1,675,000.00
Recorded Accumulated Depreciation - Furniture and Fixture, 201 355,000.00
Accumulated Depreciation - Furniture and Fixture, PAJE 1 1,320,000.00
nse And the Balances of Accummulated Depre

Adjusted Accumulated
Adjusted Accumulated Adjusted Depreciation Depreciation -
Depreciation - 12/31/2010 PAJE Expense, 2011 PAJE 12/31/2011
N/A N/A N/A
2,475,000 c 2,731,081 d 5,206,081
2,475,000 1 2,731,081 1 e 5,206,081

60,000 c 40,000 d 100,000
144,000 c 96,000 d 240,000
180,000 c 120,000 d 300,000
72,000 c 48,000 d 120,000
84,000 c 56,000 d 140,000
96,000 c 64,000 d 160,000
369,000 c 246,000 d 615,000
1,005,000 1 670,000 1 1,675,000
900,000 c 600,000 d 1,500,000
900,000 1 600,000 1 1,500,000
615,000 c 410,000 d 1,025,000
3,750 c 2,500 d 6,250
3,750 c 2,500 d 6,250
9,000 c 6,000 d 15,000
631,500 1 421,000 1 1,052,500

5,011,500 1 4,422,081 1 9,433,581
eciation and depreciation expense, the following major assumptions are followed by the auditors:
9 trial balance,the amounts of the Property, Plant and Equipment are already given and are used for the 2009 business operations of Grac
gwere
that acquisitions which
paid as of July are made
30, 2009 for the first
representing fifteen
salaries to days of the
officers andmonth are acquired
employees on the
for the first firstof
month day
theofcorporation's
the month, and those made
existence. fiftee
Hence, th
1, 2009 is the most probable date.
expense for the year.
d immaterial to the computation of the
20
1.5
18.5
as of 2011 as shown on the preliminary Trial Balance as of December 31, 2011 (Refer to K5.2).
ady amounts
without of Property,
estimations Plant,
of useful life,and Equipment
then there mayinbeGrace Corporation's
a possibility 2009 Trial Balance.
of misstatements Because
in the said of
account
tion and
tified allocation
were assertions,
subsequently used in thecomputing
auditors performed a recalculation
for their depreciation of the There
expense. depreciation
was alsoof an
every
itemdepr
in t
d Depreciation- Transportation Equipment,Accumulated
on expense. This item was the 80 showcases for the store. Depreciation - Office Equipment, Retained Ear
uisition dates, estimated useful lives, and acquisition costs on item by item basis and adjusting the acc
method of depreciation for non-current assets. As noted above, the total Accumulated Depreciation a
on's Statement of Financial Position as of December 31, 2011 are as follows: Land - P16,500,000, Build
tion and release the correct amounts for 2009 in a public document and in subsequent printouts to pro
K5
cognize an Accumulated Depreciation at the start of the year 2011 to bring the assets'
For Accumulated Depreciation - Transportation Equipment:

Appropriate Accumulated Depreciation - Transportation Equi
Recorded Accumulated Depreciation - Tranportation Equipme
Accumulated Depreciation - Transportation Equipment, PAJE 1
For Accumulated Depreciation - Office Equipment:
Appropriate Accumulated Depreciation - Office Equipment, 20
Recorded Accumulated Depreciation - Office Equipment, 2011
Accumulated Depreciation - Office Equipment, PAJE 1
ed Depreciation
Unadjusted Accumulated Difference (Adj. less Unadj.
Depreciation, 12/31/2011 Accumulated Depreciation)
- N/A
650,000 4,556,081
K1.1 650,000 4,556,081

355,000 1,320,000
1,200,000 300,000
K1.1 1,200,000 300,000
K1.1 426,000 626,500

K1.1 2,631,000 f 6,802,581
siness operations of Grace Corporation. It is assumed further that acquisition date was made exactly on the start of the
th, and
on's those made
existence. fifteen
Hence, days logical
the most before assumption
the end of the month
would are acquired
be that onwere
operations the last
madedayfor
of the
the month
month.of July 2009. Since
alance. Because
n the said of title
account the client's
and its failure
relatedtoaccumulated
recognize accumulated
depreciationdepreciation,
account. Hence,thenthe
there may
auditors
ation of an
as also every
itemdepreciable item found
in the Furnitures underhaving
& Fixtures the property, plant, and
an estimated equipment.
useful This In
life of 40 years.
ment, Retained Earnings and Depreciation Expense. The auditors recomputed the Depreciation
d adjusting the accounts of Retained Earnings and Accumulated Depreciation. The adjusted
ted Depreciation as of December 31, 2011 should be P 9,433,581 causing an increasing
P16,500,000, Building - P47,793,919, Furnitures & Fixtures - P1,875,000, Transportation
ent printouts to provide end users with comparable financial statements in accordance with
Prepared by:
MKKRA
AKRC
Reviewed by:
SSM
K5
11 to bring the assets'
1,500,000.00
1,200,000.00
300,000.00
1,052,500.00
426,000.00
626,500.00
Adjusted Net Carrying

Amount, 12/31/2011
16,500,000
47,793,919
1,875,000
4,500,000
###
1,077,500
71,746,419
made exactly on the start of the

yfor
of the
the month
month.of July 2009. Since
epreciation,
account. thenthe
Hence, there may
auditors
nd equipment.
useful This In
life of 40 years.
recomputed the Depreciation
Depreciation. The adjusted
1 causing an increasing
75,000, Transportation
ments in accordance with
Date:
2/15/2012
2/15/2012
Date:
2/16/2012
EQUIPMENT BASED ON THE COMMISSION ON AUDIT
(COA) WEBSITE
Classification WP REF Estimatied Useful Life

Land Improvements
Land Improvements 10
Runways/taxiways 20
Railways 40
Electrification,Power and Energy Structures 10
Building - those that are predominantly

Wood 10
Mixed 20
Concrete 30
Leasehold Improvements (Note 1)

Land 10
Building
Wood 10
Mixed 20
Concrete 30
Office, Equipment, Furniture and Fixtures

Office Equipment m 5
Furniture and Fixtures n 10
IT Equipment - Hardware 5
Library Books 1
1
Machineries and Equipment
Machineries 10
Agricultural, Fishery and Forestry 10
Airport Equipment 10
Communication Equipment 10
Construction and Heavy Equipment 10
Firefighting Equipment and Accessories 7
Hospital Equipment 10
Medical, Dental and Laboratory Equipment 10
Military and Police Equipment 10
Sports Equipment 10
Technical and Scientific Equipment 10
Other Machineries and Equipment 10
Transportation Equipment
Motor Vehicles 7
Trains 10
Aircraft and Aircraft Ground Equipment 10
Watercrafts 10
Other Transportation Equipment 10
Other Property, Plant and Equipment 5

Note 1 - The estimated useful life shall depend on the length of the lease. It shall be the period of the lease or the
estimated useful life of the assets, as given, whichever is shorter.
Useful life
life used
used in
in computing
computing for
for the
the depreciation
depreciation of
of certain items in theforFurniture
the store&inFixtures account&(Refer
Fixturet
Legend Useful
procedure) that do not have an estimated life from
the 80 showcases
the date of acquisition in the Grace
the Furniture
Corporation's Schedu
account (Refer to K5.1 procedure) since its estimated life from the date of acquisition in the Grace Corporatio
m Property,
Schedule ofPlant & Equipment
Property, Plant &on December
Equipment on31, 2011 (Refer
December to K2.1).
31, 2011 (Refer to K2.1) of 40 years is not the best esti
n based on this schedule.
K5 Proceed to K5 Computation for Depreciation Expense And the Balances of Accummulated Depreciation
K5.1
WP REF
K5
K5
eriod of the lease or the
ere&inFixtures account&(Refer
the Furniture to K5.1
Fixtures
Grace
tion in the Grace Corporation'sof
Corporation's Schedule
40 years is not the best estimate
mulated Depreciation
31, 2011
Debit
Cash in Bank P 4,709,230.00
Petty Cash 1,700.00
Marketable Securities 9,500,000.00
Accounts Receivable 10,318,635.00
Allowance for Bad Debts P
Notes Receivable 2,970,000.00
Merchandise Inventory 4,402,787.00
Accrued Interest Receivable 38,853.00
Prepaid Advertising 50,000.00
Prepaid Insurance 50,000.00
Unused Supplies 300,000.00
Input Tax 1,556,422.00
Land 16,500,000.00
Building 53,000,000.00
Accumulated Depreciation - Building
Furniture and Fixture 3,550,000.00
Accumulated Depreciation - Furniture and Fixture
Transportation Equipment 6,000,000.00
Accumulated Depreciation - Transportation Equipment
Office Equipment 2,130,000.00
Accumulated Depreciation - Office Equipment
Organization Cost 800,000.00
Accounts Payable
Notes Payable
Notes Payable - Officer
SSS, Medicare Premiums Payable
Withholding Taxes Payable
HDMF Premiums Payable
Accrued Interest Payable
Output Tax
Capital Stock Issued
Subscribed Capital Stock
Subscription Receivable 2,625,000.00
Premium on Capital Stock
Retained Earnings
Sales
Sales Discount 866,435.00
Sales Returns and Allowances 1,041,475.00
Interest Income
Purchase Discount
Cost of Sales 56,646,887.00
Salaries Expense 24,022,840.00
Supplies Expense 1,411,862.00
Taxes and Licenses 910,000.00
SSS, Medicare Premiums Expense 1,270,500.00
HDMF Premiums Expense 1,100,000.00
Gasoline Expense 1,146,000.00
Light, Water and Telephone 1,223,000.00
Depreciation Expense - Building 650,000.00
Depreciation Expense - Furniture and Fixture 355,000.00
Depreciation Expense - Transportation Equipment 1,200,000.00
Depreciation Expense - Office Equipment 426,000.00
Amortization of Organization Cost 200,000.00
Bad Debts Expense 497,811.00
Representation Expense 120,000.00
Advertising Expense 820,520.00
Insurance Expense 550,000.00
Miscellaneous Expense 397,938.00
Interest Expense 112,065.00
Total 213,470,960.00
K5.2
Credit
497,811.00
650,000.00
355,000.00
1,200,000.00
426,000.00
5,124,090.00
3,506,500.00
1,700,000.00
144,720.00
129,600.00
63,200.00
66,565.00
2,470,332.00
70,000,000.00
5,000,000.00
5,250,000.00
4,481,456.00
112,152,313.00
248,853.00
4,520.00
213,470,960.00
ORGANIZATIONAL COS
Date
2002
May 2 Securities and Exchange
Commission
April 3 Atty. Arthur Cruz
April 15 Century Park Sheraton
July 30 Officers and Employees
Total
TIONAL COST K5.3
Reference
CV# 2002 5-2 registration fee for the 100,000.00

corporation
CV# 2002 4-3 professional fee for

incorporationpapers 200,000.00
CV# 2002 4-6 food served for meetings

on the establishment of
the corporation 280,000.00
CV# 2002 6-4 salaries for the 1st month

of the corporation's
existence 420,000.00
---------------------------
1,000,000.00
Decem
ANALYTICA
Audit Objectives
2. To obtain evidential matter about particular assertions related to account balances o
Audit
1. Procedures
Compare the account balances of the fixed assets and its related depreciation for th
amounts or deviations from trends.
2. Consider computing for the following ratios and compare the rates of the current yea
a. Fixed Asset Turnover
b. Fixed Asset to Net Worth Ratio
Findings
Horizontal Analysis
Account No Account Title WP REF

201 Land K
202 Building K
202-A Accumulated Depreciation - Building K
203 Furniture and Depreciation
Accumulated Fixture - Furniture and K
203-A Fixture K
204 Transportation Equipment - Transportation
Accumulated Depreciation K
204-A Equipment K
205 Office Equipment K
205-A Accumulated Depreciation - Office Equipment K
Total Property, Plant and Equipment
Fixed Asset Turnover
December 31, 201

Adjusted Net Sales
Divided by: Ave. Fixed Asset(net)
Fixed Asset Turnover
Fixed Asset to Net Worth Ratio
Net Fixed Asset K

Divided By: Net worth d
Fixed Asset to Net Worth Ratio
Legend
a The Average Fixed Asset (Net of Accumulated Depreciation is computed by
a1 The December 2010 Average Fixed Assed (Net of Accumulated De
Carrying amount,
Plus: Carrying Total Total
amount, PPE 12/31/2009
PPE
12/31/2010
Total
Divide by 2010 Average Net Fixed
December
Asset
a2 The December 2011 Average Fixed Assed (Net of Accumulated De
Carrying
Plus: amount,
Carrying Total Total
amount, PPE 12/31/2010
PPE
12/31/2011
Total
Divide by 2011 Average Net Fixed
December
Asset
*From K5
b Computed net sales,
Adjusted sales, 2011 2010 P53,439,000 based
of P111,126,930.00 onproposed
due to 2010 Income Statement.
adjustments ma
c P300,000.00 and sales returns and allowances of P800,000.00 (Refer to K5
d Net Worth/Total Equity is computed by using this formula: (Total Assets - T
d1 The December 2010 Net Worth/Total Equity is computed by:
Total Assets for 12/31/2010

Less: Total Liabilities for 12/31/2010
Net Worth/ Total Equity for 12/31/2010
d2 The December 2011 Net Worth/Total Equity is computed by:
Total Assets for 12/31/2011

Less: Total Liabilities for 12/31/2011
Net Worth/ Total Equity for 12/31/2011
Conclusion
1. Based on the information gathered, the net fixed assets roughly increased by 27.73%
Grace
2. The Corp
fixed in which
asset it is capitalized
turnover to the Building
of the company account.
increases by 88.06%. The increase resulted
year of 2010 and also from the adjustments of the accumulated depreciation during th
effectively
3. The fixedutilize their
assets fixed
to net asset
worth to generate
ratio decreased more sales. It means that Grace Corp's
by 24.82%.
accumulated depreciation of the related Fixed Assets accounts. This ratio also shows th
operations.
December 31,2011
ANALYTICAL PROCEDURES K6
extent of other auditing procedures.
lated to account balances or classes of transactions.
on in the final review stage of the audit.
s related depreciation for the current and prior year. Investigate significant changes in
the rates of the current year from the previous year.
Adjusted 12/31/2010WP REF

Adjusted 12/31/2011WP REF Variance % Change
16,500,000.00 K 16,500,000.00 0.00 0.00%
33,000,000.00 K 53,000,000.00 ### 60.61%
2,475,000.00 K5 5,206,081.08 2,731,081.08 110.35%
3,550,000.00 K 3,550,000.00 0.00 0.00%
1,005,000.00 K5 1,675,000.00 670,000.00 66.67%
6,000,000.00 K 6,000,000.00 0.00 0.00%
900,000.00 K5 1,500,000.00 600,000.00 66.67%
2,130,000.00 K 2,130,000.00 0.00 0.00%
631,500.00 K 1,052,500.00 421,000.00 66.67%
56,168,500.00 71,746,418.92 ### 27.73%
December 31, 2010 December 31, 2011 Difference % Change

0.00 b 0.00 c 0.00 #DIV/0!
57,839,000.00 a1 63,957,459.46 a2 6,118,459.46 10.58%
0.00 0.00 0.00 #DIV/0!
December 2010 December 2011 Difference % Change
61,180,000.00 K5 71,746,418.92 ### 17.27%
78,529,500.00 d1 0.00 d2 ### -100.00%
77.91% #DIV/0! #DIV/0! #DIV/0!
Depreciation is computed by using this formula: (Beginning Net Fixed Asset + Ending Net Fixed Asset)/2
ed (Net of Accumulated Depreciation) is computed by:
59,509,500.00
56,168,500.00
115,678,000.00
2
57,839,000.00
ed (Net of Accumulated Depreciation) is computed by:
56,168,500.00
71,746,418.92
127,914,918.92
2
63957459.45946
nproposed
2010 Income Statement.
adjustments made for the month of December (Refer to E3B) less sales discount of
of P800,000.00 (Refer to K5.3 Preliminary Trial Balance).
s formula: (Total Assets - Total Liabilities)
quity is computed by:
79,580,000.00
1,050,500.00
78,529,500.00
quity is computed by:
111,325,777.26
11,125,960.00
100,199,817.26
roughly increased by 27.73%. The increase is due to the additional improvement made by
..06%. The increase resulted from the increase of company sales as compare to the prior
ated depreciation during the audit. Furthermore, this increase also means that Grace Corp.
It means that Grace Corp's increase in solvency is due to the adjustments in the
nts. This ratio also shows the portion of the company's funds that is not available for
Prepared by:Date:
SPR 2/16/2012
Reviewed by:Date:
MRL 2/16/2012
K6
g Net Fixed Asset)/2
discount of
Decembe
LEAD SCHEDULE - I
BALANCE BALANCE
ACCOUNT NUMBER
ACCOUNT NAME
WP REF.
2009 2010
301 Organization Cost L 1,000,000.00 1,000,000.00
TOTAL 1,000,000.00 1,000,000.00
December 31,2011
D SCHEDULE - INTANGIBLE ASSETS L
UNADJUSTED PAJE AUDITED
DIFFERENCE
% CHANGE
BALANCE 2011 Debit Credit BALANCE 2011
800,000.00 0.00 800,000.00 0.00 ### -100.00%
800,000.00 0.00 800,000.00 0.00 ### -100.00%
December 31,2011
CHECK PROPER CAPITALIZA
Audit Objectives
1.
2. To determine if costs
that thehad been
assets capitalized
represent in accordance
amounts that are with PAS 38,expected
reasonably Intangible
toAss
be
otherwise, and that they are properly recorded.
Assertions Affected
1. Existence
Audit Procedures
1. Examine transactions of prior period/s.
Upon examination of Grace Corporation's prior period/s transactions and financial state
2. Obtain an analysis of intangible assets and whether the entity controls them.
the corporation capitalized Organization Cost worth P1,000,000 as a component of its I
3. Verify the
amortized accuracy
the of the
cost during theanalysis
current by performing
year tests
2011, thus of mathematical
bringin computation
the carrying amount of t
Preliminary Trial Balance (Refer to K5.2). This is not in accordance with PAS 38, Intangi
Findingsby a start-up entity shall be recognized immediately as expense. Henceforth,
incurred
P200,000 should also be eliminated in the financial statements.
PAJE 1 Retained Earnings K5.3

Amortization of Organization Cost
To eliminate Organization Cost account in
Organization CostPAS 38 and related amortization
accordance with
expense
Legend
K5.2 Amount from K5.2, Preliminary Trial Balance - December 31, 2011
K5.3 Amount from K5.3, Organization Cost
The auditors determined that there Grace Corporation has no existing intangible asset
Conclusion
Position since according to PAS 38, organization cost should be expensed when incurre
there are no further exceptions noted.
December 31,2011
PROPER CAPITALIZATION L1
with PAS 38,expected
easonably Intangible
toAssets.
be realized through future operations or
actions and financial statements, the auditors determined that

tity controls them.
00 as a component of its Intangible Assets and subsequently
mathematical
n computations
the carrying amount of the to the extent
intangible deemed
asset necessary.
to P800,000 in its
ance with PAS 38, Intangible Assets. Organization costs
as expense. Henceforth, the related amortization expense of
ts.
1,000,000.00
K5.2 200,000.00
K5.2 800,000.00
mber 31, 2011
o existing intangible asset to report in its Statement of Financial

be expensed when incurred. Other than those mentioned,
Prepared byDate:
ARC 2/14/2012
Reviewed by
Date:
SPR 2/14/2012
December 31,2011
RECOMPUTATION OF AMORTI
EXPENSE
Audit Objectives
1. To determine that intangible assets are reported at the appropriate amount.
2. To determine that the costs of intangible assets are properly allocated to the approp
3. To determine if the amortization policies of Grace Corporation are in accordance wit
Assertions Affected
Audit Procedures
1. Check company policy to ascertain the amortization method used and if it is in acco
2. Recompute amortization expense for the period using the amortization method elec
3. Inquire
Based management
on the for any discrepancies
previous procedure and
in the audit of adjust accordingly.
intangible assets, it was determined th
any such assets to report in accordance with PAS 38. Hence, there is no need to recom
Findings
period for there are no asset/s to amotize. In K5.2, Preliminary Trial Balance - Decembe
reported an Amortization Expense of P200,000. This amount is adjusted accordingly in
Futhermore, Grace Corporation does not have an amortization policy expressly stated.
There is no need to recompute for amortization expense since there are no intangible a
Conclusion
Intangible Assets to amortize. However, it is recommended by the auditors that Grace
amortization method used in its company policies which should appropriately be in acc
December 31,2011
UTATION OF AMORTIZATION
EXPENSE
L2
ppropriate amount.
rly allocated to the appropriate periods in a systematic and rational manner.
ion are in accordance with PAS 38.
od used and if it is in accordance with PAS 38.

amortization method elected by Grace Corporation.
sets, it was determined that Grace Corporation does not have
there is no need to recompute for amortization expense for the
y Trial Balance - December 31, 2011, Grace Corporation
is adjusted accordingly in the previous procedure (Refer to L1).
n policy expressly stated.
e there are no intangible assets in accordance with PAS 38,
y the auditors that Grace Corporation should employ an
uld appropriately be in accordance with PAS 38.
Prepared byDate:
ARC 2/14/2012
Reviewed by
Date:
CDS 2/14/2012
December 31,2011
Audit Objectives
1. To determine that intangible assets and related accounts are properly described, cla
financial
2. statements,
To determine including notes,
that intangible assetsin conformity
held with
for sale or PFRS. are carried at the lower
disposal
fair value less costs to sell.
3. To determine that impaired intangible assets are recorded at estimated recoverable
Assertions Affected
3. Valuation
Audit Procedures
1. Review contracts for Intangible Assets.
2. Inspect for indications of impairment.
3. Disclose items as necessary, as required by applicable standards.
Grace Corporation should not report any Intangible Asset in its financial statements, as
Findings
audit procedures conducted. Hence, there are no contracts or documents to review. Th
to impair and provide additional disclosures of.
Conclusion
ber 31,2011
R IMPORTANT MATTERS L3
ts are properly described, classified and disclosed in the
FRS. are carried at the lower of their carrying amount or
posal
ded at estimated recoverable amount.
standards.
n its financial statements, as determined in the previous
s or documents to review. There are no intangible assets
Prepared byDate:
CDS 2/14/2012
Reviewed by
Date:
AKRC 2/14/2012
December 31,
ANALYTICAL PROC
Audit Objectives
2. To obtain evidential matter about particular assertions related to account balances o
Audit
1. Procedures
Compare the account balances of the intangible assets and its related amortization
changes in amounts or deviations from trends.
2. Consider computing for the following ratios and compare the rates of the current yea
a. Goodwill to Asset Ratio
b. Intangible to Tangible Asset Ratio
The auditors determined that Grace Corporation should not report any intangible asset
Findings
inception based on the previous audit procedures for intangible assets. Hence, ratios r
further analytical procedures.
Conclusion
ecember 31,2011
YTICAL PROCEDURES L4
of other auditing procedures.
o account balances or classes of transactions.
e final review stage of the audit.
elated amortization for the current and prior year. Investigate significant
es of the current year from the previous year.
any intangible asset in its financial statements ever since its corporate
sets. Hence, ratios relating to intangible assets cannot be applied in
Prepared by:Date:
SPR 2/14/2012
Reviewed by:Date:
MRL 2/14/2012
LEAD SCHEDU
BALANCE
ACCOUNT NUMBER ACCOUNT NAME WP REF.
2009
1001 Accounts Payable N 900,000.00
1002 Notes Payable O 0.00
1003 Notes Payable-Officer O 0.00
1004 SSS Medicare Premium Payab N 52,000.00
1005 Withholding Taxes Payable N 40,500.00
1006 HDMF Premiums Payable N 21,500.00
1009 Property Taxes Payable N 0.00
1010 Utilities Payable N 0.00
1011 Employee Bonus Payable VB1 0.00
1012 Accrued Representations Payable 0.00
Cash Dividends Payable 0.00
TOTAL ###
December 31,2011
LEAD SCHEDULE - TRADE AND OTHER PAYABLES

2010 BALANCE 2011 Debit Credit BALANCE
906,500.00 ### 0.00 457,850.00 ###
0.00 ### 0.00 0.00 ###
0.00 ### 0.00 0.00 ###
62,000.00 144,720.00 0.00 0.00 144,720.00
52,500.00 129,600.00 0.00 0.00 129,600.00
29,500.00 63,200.00 0.00 0.00 63,200.00
0.00 0.00 0.00 0.00 0.00
0.00 0.00 0.00 0.00 0.00
0.00 0.00 0.00 0.00 0.00
0.00 0.00 0.00 0.00 0.00
0.00 0.00 0.00 0.00 0.00
### ### 0.00 457,850.00 ###
N
DIFFERENCE % CHANGE
### 515.77%
### -%
### -%
82,720.00 133.42%
77,100.00 146.86%
33,700.00 114.24%
0.00 -%
0.00 -%
0.00 -%
0.00 -%
0.00 -%
### 959.11%
December
AGREE GENERAL
SUBSIDIAR
Audit Objectives
1. To determine that payables exist as of the balance sheet date.
2. To verify the existence of the accounts payables.
3. To determine whether balance of accounts of the creditors are accurate.
4. To determine whether all transactions relative to payables are recorded in the prope
Assertions Affected
1. Existence
2. Valuation
3. Completeness
Audit Procedures
1. Obtain a schedule or list of suppliers with their corresponding balances.
2. Check and recalculate total balance of Subsidiary Ledger and compare to General Le
3. Reclassify debit balances of accounts payable to accounts receivable.
4. Reclassify accounts payables to other appropriate payable accounts in accordance w
5. Reconcile with amount in trial balance.
6. Determine discrepancies noted during investigation and make the necessary propos
7. Interview management of any discrepancy in amounts.
Findings
Shown below is the summary of the subsidiary ledger and general ledger balances and
Account Beg. Balance,

Name of Supplier
No. Dec. 1
1001 Arboleda Co., Inc. 1,554,500.00
1002 Sapphire Corporation 2,100,470.00
1003 Genius Paper Products 1,906,500.00
TOTAL Unadj. Subsidiary Ledger Bal N1.1 5,561,470.00
AP General Ledger N1.2 6,743,240.00
Initial Difference 1,181,770.00
ADJUSTMENTS TO S
Unrecorded Purchases for December
PI 107 Arboleda Co., Inc. F1.2 (34,200.00)
PI 1090 Sapphire Corporation F1.2 (14,000.00)
PI 1100 Sapphire Corporation F1.2 (13,325.00)
PI 135 Genius Paper Products F1.2 (13,250.00)
Errors
CV306 Arboleda Co., Inc. F1.2 1,399,050.00
PI 130 Genius Paper Products F1.2 (50,000.00)
PI 140 Genius Paper Products F1.2 (5.00)
Total Adjusted Subsidiary Ledger Bal 6,743,240.00
AP General Ledger 6,743,240.00
ADDITIONAL ADJUSTMEN
PI 7729 Genius Paper Products
PI 825 Arboleda Co., Inc.
Total Adjusted AP General Ledger 6,743,240.00
Legend
F1.1 Traced from Purchase Books
F1.2 Traced from Purchase Invoices
N1.1 Traced from Accounts Payable - Subsidiary Ledger
N1.2 Traced from General Ledger - Liability
✓ Footed
a These are unrecorded purchases in the subsidiary ledger for the mo
subsidiary ledger since its ending balance equals the general ledger
these are purchases recorded in advanced (Included in November b
b purchases
This amount of was
the current month. inputted as P19,125 in Purchase In
also incorrectly
c This disbursement was incorrectly recorded in the subsidiary ledger
d This amount is an adjustment to an understatement of purchases in
recorded as P1,200,000 in the subsidiary ledger. However, it was pr
e A purchase of P127,875 was incorrectly recorded as P127,870 in the
purchase books and general ledger. Although this amount is immate
f correct balance
First, this amount in was
agreeing subsidiary
incorrectly ledger
recorded as to general instead
P165,000 ledger. of P
amounting to P252,250 was not recorded both in the subsidiary and
proposed in the previous procedure (F7) - Inventory Cut-off. Refer to
g This purchase amounting to P155,600 was not recorded both in the
already proposed in the previous procedure (F7) - Inventory Cut-off.
Conclusion
During the conduct of the audit procedure, the audit team discovered discrepa
determine whether or not the payables exist, valuated correctly and recorded
following: Accounts Payable Subsidiary Ledger, General Ledger, Cash Disburse
Vouchers. Other than the discovered findings, there were no further exception
adjustments to the subsidiary ledger and general ledger.)
December 31,2011
REE GENERAL LEDGER WITH
SUBSIDIARY LEDGER
N1
accurate.
recorded in the proper accounting period.
balances.
compare to General Ledger.
ounts in accordance with applicaple PFRS.
the necessary proposed adjustments.
al ledger balances and its corresponding adjustments:
End Balance,
Debit Credit
Dec. 30
441,200.00 543,625.00 1,656,925.00
1,172,650.00 556,850.00 1,484,670.00
4,616,875.00 ### 1,982,495.00
✓ N1.1 ### ✓ N1.1 ### N1.1 5,124,090.00 ✓
✓ N1.2 ### ✓ N1.2 ### N1.2 5,124,090.00 ✓
### 217,280.00 0.00
ADJUSTMENTS TO SUBSIDIARY LEDGER
a F1.2 34,200.00 a
a F1.2 87,500.00 a
a F1.2 5,000.00 a
a F1.2 14,000.00 a
a;b F1.2 13,325.00 a;b
a F1.2 13,250.00 a
c F1.2 1,399,050.00 c
d F1.2 50,000.00 d
e F1.2 5.00 e
### ### 5,124,090.00
### ### 5,124,090.00
TIONAL ADJUSTMENTS TO GENERAL LEDGER

F1.2 252,250.00 f F1.2 252,250.00 f
F1.2 155,600.00 g F1.2 155,600.00 g
### ### 5,531,940.00
iary ledger for the month of December. It was adjusted in the beginning balance of the
als the general ledger balance which is correctly computed. The auditors believe that
cluded in November balance) therefore it should be deducted and added to the
19,125 in Purchase Invoice no. 1100 but was correctly recorded in the purchase books as P13,325 (Se
the subsidiary ledger as P155,450 instead of P1,554,500
ement of purchases in subdiary ledger. A purchase of P1,250,000 was incorrectly
er. However, it was properly recorded in the purchase books and general ledger.
ded as P127,870 in the subsidiary ledger. However, it was properly recorded in the
this amount is immaterial, it was taken into account for the purpose of arriving at the
to general instead
P165,000 ledger. of P252,250 in Purchase Invoice no. 7729 (See F2.1). This purchase
in the subsidiary and general ledger. However, the adjusting entry was already
ntory Cut-off. Refer to PAJE No. 5 for the said adjusting entry.
recorded both in the subsidiary and general ledger. However, the adjusting entry was
7) - Inventory Cut-off. Refer to PAJE No. 6 for the said adjusting entry.
m discovered discrepancies between the subsidiary ledger and general ledger. To

orrectly and recorded properly, the audit team vouched and cross referenced the
Ledger, Cash Disbursements Book, Purchases Book, Purchases Invoices and Cash
e no further exceptions noted. (See N1A for the summary of results and the following
.)
Prepared by: Date:
RAC 2/15/2012
SSM 2/15/2012
Reviewed by: Date:

MRL 2/15/2012
ooks as P13,325 (See F2.1)
De
AGREE GENERAL LE
Findings
Purchas
e Balance per
Name of Supplier
Invoice Purchase Invoice
No.
111 Genius Paper Products F1.2 1,425,000.00 N1.1
101 Arboleda Company Inc. F1.2 413,750.00 N1.1
1082 Sapphire Corporation F1.2 459,600.00 N1.1
112 Arboleda Company Inc. F1.2 87500 N1.1
135 Genius Paper Products F1.2 13,250.00 N1.1
F1.2 N1.1
140 Genius Paper Products 127,875.00
F1.2 N1.1
1100 Sapphire Corporation 19,125.00
F1.2 N1.1
7729 Genius Paper Products 165,000.00
F1.2 N1.1
825 Arboleda Company Inc. 155,600.00
TOTAL: 6,337,025.00
Legend
F1.1 Traced from Purchase Books
F1.2 Traced from Purchase Invoices
N1.1 Traced from Accounts Payable - Subsidiary Ledger
✓ Footed
December 31,2011
GENERAL LEDGER WITH SUBSIDIARY LEDGER
Balance per Balance per Adjustments to

Subsidiary Purchase Book Subsidiary
Ledger (F7.5) Ledger
N1.1 1,425,000.00 F1.1 1,425,000.00 -
N1.1 413,750.00 F1.1 413,750.00 -
N1.1 459,600.00 F1.1 459,600.00 -
N1.1 1,600,000.00 F1.1 1,600,000.00 -
N1.1 1,200,000.00 F1.1 1,250,000.00 50,000.00
N1.1 - F1.1 14,000.00 140,000.00
N1.1 - F1.1 34,200.00 34,200.00
N1.1 - F1.1 87500 87,500.00
N1.1 - F1.1 13,250.00 13,250.00
N1.1 85,000.00 F1.1 85,000.00 -
N1.1 85,000.00 F1.1 85,000.00 -
N1.1
127,870.00 F1.1 127,875.00 5.00
N1.1 - F1.1 5,000.00 5,000.00
N1.1 130,000.00 F1.1 130,000.00 -
N1.1 12,250.00 F1.1 12,250.00 -
N1.1 25,750.00 F1.1 25,750.00 -
N1.1 45,000.00 F1.1 45,000.00 -
N1.1
- F1.1 13,325.00 13,325.00
N1.1 165,000.00 F1.1 165,000.00 -
N1.1 19,125.00 F1.1 19,125.00 -
N1.1
- F1.1 - 252,250.00
N1.1
- F1.1 - 155,600.00
5,793,345.00 ✓ 6,010,625.00 ✓ 751,130.00
N1A
Adjustments to
Remarks
General Ledger
- No exceptions noted
- Understated purchase in SL
- Unrecorded Purchase in SL
Understated purchase in
SL; Improper units
Recorded in PI (See F2.1
- for adjusted stock cards)
- No exceptions
Unrecorded noted in
Purchase
SL; Improper
computation of total
- amount due
- No exceptions
Unrecorded noted in
Purchase
SL & GL; Improper
252,250.00 amount due
Unrecorded Purchase in
SL & GL; Improper
155,600.00 amount due
407,850.00
ACCOUNTS PAYABLE SUBSIDIARY LEDGERS
NAME: Arboleda Co., Inc.
ADDRESS: 456 Quezon Boulevard Extension, Quezon City
DATE PARTICULARS DEBIT

2011
Nov. 30 Balance
Dec. 1 PI 101
CV 304 175,000.00
CV 306 ▼155,450
PI 117
CV 311 85,000.00
PI 127
CV 316 25,750.00
PI 130
NAME: Sapphire Corporation
ADDRESS: 85 Quarry Avenue, Parañaque City

2011
Nov. 30 Balance
Dec. 3 PI 1082
5 CV 301 972,750.00
10 CV 305 114,900.00
18 PI 1095
23 PI 1099
28 CV 318 85,000.00
NAME: Genius Paper Products

ADDRESS: 951 Del Sol Avenue, Pasay City

2011
Nov. 30 Balance
Dec. 1 converted to 90-day 24% note 1,906,500.00
2 PI 111
2 CV 300 300,000.00
6 PI 127
6 converted to 27% 150-day note 1,600,000.00
10 PI 130
15 CV 309 625,000.00
20 PI 140
22 PI 145
26 PI 147
26 CV 313 32,500.00
26 CV 314 127,875.00
26 CV 315 25,000.00
28 PI 151
RY LEDGERS N1.1
ACCOUNT NO.: 1001 Legend
CREDIT BALANCE
1,554,500.00
413,750.00 1,968,250.00
1,793,250.00
1,637,800.00 Correct balance is P1,554,500
85,000.00 1,722,800.00
1,637,800.00
25,750.00 1,663,550.00
1,637,800.00
19,125.00 1,656,925.00
ACCOUNT NO.: 1002
CREDIT BALANCE
2,100,470.00
459,600.00 2,560,070.00
1,587,320.00
1,472,420.00
85,000.00 1,557,420.00
12,250.00 1,569,670.00
1,484,670.00
ACCOUNT NO.: 1003
CREDIT BALANCE
1,906,500.00
--
1,425,000.00 1,425,000.00
1,125,000.00
1,600,000.00 2,725,000.00
1,125,000.00
▼1,200,000 2,325,000.00 ▼Correct Balance is 1,250,000
1,700,000.00
▼127,870 1,827,870.00 ▼Correct Balance is 127,875
130,000.00 1,957,870.00
45,000.00 2,002,870.00
1,970,370.00
1,842,495.00
1,817,495.00
165,000.00 1,982,495.00
GENERAL LEDGER- LIABILITY
ACCOUNT Accounts Payable
DATE ITEM F DEBIT DATE

2011 2011
Dec. 1 GJ 11 P 1,906,500.00 Nov. 30
6 GJ 11 1,600,000.00 Dec. 31
31 GJ 11 4,123,275.00
ACCOUNT Notes Payable

2011
Dec. 1
6
ACCOUNT Notes Payable - Officer

2011
Nov. 30
ACCOUNT SSS, Medicare Premiums Payable

2011 2011
Dec. 31 CD 12 P 87,500.00 Nov. 30
Dec. 31
ACCOUNT Withholding Taxes Payable

2011 2011
Dec. 31 CD 12 P 34,200.00 Nov. 30
Dec. 31
31
ACCOUNT HDMF Premiums Payable

2011
Nov. 30
Dec. 31
31
ACCOUNT Accrued Interest Payable

2011
Dec. 31
ACCOUNT Output Tax

2011
Nov. 30
Dec. 31
LIABILITY N1.2
ACCOUNT NO. 1001
ITEM F CREDIT
Balance P 6,743,240.00
PJ 12 6,010,625.00
Balance 5,124,090.00
ACCOUNT NO. 1002
ITEM F CREDIT
GJ 11 P 1,906,500.00
GJ 11 1,600,000.00
Balance 3,506,500.00
ACCOUNT NO. 1003
ITEM F CREDIT
Balance P 1,700,000.00
ACCOUNT NO. 1004
ITEM F CREDIT
Balance P 87,500.00
CD 12 72,360.00
CD 12 72,360.00
Balance 144,720.00
ACCOUNT NO. 1005

ITEM F CREDIT
Balance P 34,200.00
CD 12 64,800.00
CD 12 64,800.00
Balance 129,600.00
ACCOUNT NO. 1006
ITEM F CREDIT
Balance P 20,000.00
CD 12 21,600.00
CD 12 216,600.00
Balance 63,200.00
ACCOUNT NO. 1007
ITEM F CREDIT
GJ 12 P 66,565.00
ACCOUNT NO. 1008
ITEM F CREDIT
Balance P 2,200,000.00
SJ 12 270,332.00
Balance 2,470,332.00
December 31,2011
CONFIRMATION
Audit Objectives
1.To determine that accounts payables exist as of the balance sheet date.
2.To verify the existence of the accounts payables
3. To determine that accounts payables stated in the balance sheet represent authent
4. To verify whether balance of accounts of the creditors are accurate.
Assertions Affected
1. Existence
3. Valuation
4. Completeness
Audit Procedures
1. Conduct sampling from list of suppliers to be confirmed.
2. Construct a confirmation letter asking for a statement of account.
3. Send confirmation letter to the suppliers.
4. Obtain replies of the confirmation letters from the suppliers.
5. Review suppliers' accounts and compare it with the suppliers confirmation of their a
6. Perform alternative procedures on accounts that do not respond to positive confirma
a. Vouch for supporting documents.
b. Check subsequent payments during January because they are most probabl
December considering that the terms of accounts payable usually have a one
7. Inquire management for material differences.
1. The accounts confirmation letters do not contain any signatures from the suppliers.
Findings
letters where not sent. Thus, the auditors opted to conduct an alternative procedure to
A
2. summary
Arboleda of thissubsidiary
Inc.'s procedures is shown
ledger in N2.1
shows a P1,656,925.00 balance, however after exa
the account totaled P1,812,525.00. The difference of P155,600 is attributed to an unre
purchase invoice # 825.
There is no PAJE to be recorded since it was already reflected in F7- Inventory cutoff PA
3. Sapphire Corporation's subsidiary ledger shows the correct balance of P1,654,670.00
4. Genius Paper Products' subsidiary ledger shows a P1,982,495.00 balance, however a
invoices, the account totaled P2,234,745.00. The difference of P252,250.00 is attribute
evidenced by purchase invoice #7729.
There is no PAJE to be recorded since it was already reflected in F7- Inventory cutoff PA
Conclusion
After going through with the accounts payable confirmation letters, it came to the atte
letters do not contain any signature from the suppliers. This may indicate that the lette
confirm the existence, valuation, completeness and whether these AP accounts are au
company, the auditor vouched the cash vouchers, purchase invoices, purchase books a
the subsidiary account. The auditor also traced entries in the subsidiary account to its
auditor also agreed the general ledger to the subsidiary ledger account to audited beg
stated findings, there were no further exceptions found. (See N2.1 for the summary of
procedure results.)
ber 31,2011
IRMATION N2
ance sheet date.
nce sheet represent authentic obligations owed by the company.

are accurate.
f account.
pliers confirmation of their accounts.

respond to positive confirmation requests.
cause they are most probably accounts payable on

payable usually have a one month period.
gnatures from the suppliers. This may indicate that the

t an alternative procedure to confirm the account balances.
0 balance, however after examining the purchase invoices,
5,600 is attributed to an unrecorded purchase evidenced by
ted in F7- Inventory cutoff PAJE #6.

rect balance of P1,654,670.00.
2,495.00 balance, however after examining the purchase
e of P252,250.00 is attributed to an unrecorded purchase
ted in F7- Inventory cutoff PAJE #5
on letters, it came to the attention of the auditors that the

is may indicate that the letters were not sent. Thus, to
her these AP accounts are authentic obligations to the
se invoices, purchase books and cash disbursement books to
the subsidiary account to its supporting documents. The
dger account to audited beginning balance. Other than the
See N2.1 for the summary of the AP confirmation alternative
Prepared by: Date:

MRFL 2/15/2012
SSM 2/15/2012
Reviewed by: Date:

RAC 2/15/2012
December 31,2011
SUMMARY OF THE ALTERNATIVE P
ACCOUNTS PAYABLE CONFI
Arboleda Co., Inc
Unadjusted
Balance
Beg, Balance N1.1 1,554,500.00 N1
PI101 F1.2 413,750.00 F1.2
CV304 C2.4 (175,000.00) C2.4
CV306 C2.4 (155,450.00) C2.4
P1107 F1.2
PI112 F1.2
PI117 F1.2 85,000.00 F1.2
CV311 C2.4 (85,000.00) C2.4
PI120 F1.2
PI127 F1.2 25,750.00 F1.2
CV316 C2.4 (25,750.00) C2.4
PI130 F1.2 19,125.00 F1.2
PI825 F1.2
Total 1,656,925.00 ✓
Unadjusted
Balance
Beg, Balance N1.1 2,100,470.00 N1
P11082 F1.2 459,600.00 F1.2
CV301 C2.4 (972,750.00) C2.4
CV305 C2.4 (114,900.00) C2.4
PI1090 F1.2
PI117 F1.2 85,000.00 F1.2
PI1099 F1.2 12,250.00 F1.2
CV318 C2.4 (85,000.00) C2.4
PI1100 F1.2
Total 1,484,670.00 ✓
Genius Paper Products

Unadjusted
Balance
Beg, Balance N1.1 1,906,500.00 N1
converted to 90-day 24% noN1.1 (1,906,500.00) N1.1
PI111 F1.2 1,425,000.00 F1.2
CV300 C2.4 (300,000.00) C2.4
PI127 F1.2 1,600,000.00 F1.2
converted to 27% 150-day nN1.1 (1,600,000.00) N1.1
PI130 F1.2 1,200,000.00 F1.2
CV309 C2.4 (625,000.00) C2.4
PI135 F1.2
PI140 F1.2 127,870.00 F1.2
PI145 F1.2 130,000.00 F1.2
PI147 F1.2 45,000.00 F1.2
CV313 C2.4 (32,500.00) C2.4
CV314 C2.4 (127,875.00) C2.4
CV315 C2.4 (25,000.00) C2.4
PI151 F1.2 165,000.00 F1.2
PI7729 F1.2
Total 1,982,495.00 ✓
Legend
N1 Traced from agree general ledger with subsidiary ledger
C2.4 Traced from cash vouchers
F1.2 Traced from purchase invoices
N1.1Traced from Accounts Payable - Subsidiary Ledger
✓ Footed
^ Computed by subtracting and adding the adjustments stated in N1 with the unad
December 31,2011
F THE ALTERNATIVE PROCEDURE FOR
UNTS PAYABLE CONFIRMATION
N2.1
Adjusted
Adjustments
Balance
2,826,850.00 ^ #NAME?
413,750.00 #NAME?
(175,000.00) #NAME?
(1,554,500.00) #NAME?
34,200.00 #NAME?
87,500.00 #NAME?
85,000.00 #NAME?
(85,000.00) #NAME?
5,000.00 #NAME?
25,750.00 #NAME?
(25,750.00) #NAME?
19,125.00 #NAME?
155,600.00 #NAME?
1,812,525.00 ✓ #NAME? ✓
Adjusted
Adjustments
Balance
2,073,145.00 ^ #NAME?
459,600.00 #NAME?
(972,750.00) #NAME?
(114,900.00) #NAME?
14,000.00 #NAME?
85,000.00 #NAME?
12,250.00 #NAME?
(85,000.00) #NAME?
13,325.00 #NAME?
1,484,670.00 ✓ #NAME? ✓
Adjusted
Adjustments
Balance
1,843,245.00 ^ #NAME?
(1,906,500.00) #NAME?
1,425,000.00 #NAME?
(300,000.00) #NAME?
1,600,000.00 #NAME?
(1,600,000.00) #NAME?
1,250,000.00 #NAME?
(625,000.00) #NAME?
13,250.00 #NAME?
127,875.00 #NAME?
130,000.00 #NAME?
45,000.00 #NAME?
(32,500.00) #NAME?
(127,875.00) #NAME?
(25,000.00) #NAME?
165,000.00 #NAME?
252,250.00 #NAME?
2,234,745.00 ✓ #NAME? ✓
s stated in N1 with the unadjusted balance

December 31,2011
PURCHASE CUT-OFF
Audit Objectives
1. To determine if all balances of purchases and accounts payable transactions are rec
Assertions Affected
1. Completeness
Audit Procedures
1. Obtain and examine purchase invoices 15 days before and after year-end.
2. Trace invoices to the purchases & accounts payable records from the ledgers.
3. Check whether it is appropriately recorded as either cash or credit purchases.
Findings
1. Purchase invoice No. 7729 from Genius Paper Products, No. 825 from Arboleda comp
Sapphire Corporation were not recorded. Among the three unrecorded purchases, only
no. 825
2. For need
the adjustments,
procedures done,to be recorded
refer in purchase
to F7.4 for the proper period.
cut-off schedule and F7.5 for the
indicating the adjustments. The PAJE for these findings were already included in F7; PA
Conclusion
There were no further exceptions noted based from the results obtained.
ber 31,2011
ASE CUT-OFF N3
payable transactions are recorded in the proper period.
and after year-end.

ords from the ledgers.
sh or credit purchases.
No. 825 from Arboleda company, inc. and no. 770 from
unrecorded purchases, only Purchase invoice no. 7729 and
eriod.
off schedule and F7.5 for the complete purchase book
re already included in F7; PAJE number 5 and 6.
sults obtained.
Prepared by: Date:

CDS 2/15/2012
EAU 2/15/2012
Reviewed by: Date:

SSM 2/15/2012
December 31,2011
REVIEW OTHER IMPORTANT MATTERS
Audit Objectives
1. To determine that payables stated in the balance sheet represent authentic obligati
2. To verify the existence of the accounts payables.
Assertions Affected
Audit Procedures
1. Inquire about any contract involving asset financing, i.e. pledging, assigning, collate
2. Check if there are any payables from related parties, i.e. subsidiaries, major supplier
Findings
Upon inspection of the documents provided by the management, it was found that the
or assigned to incur the accounts payable. It was also found that Grace Corporation did
with related parties and do not have any payables from related parties, such as subsid
Conclusion
ber 31,2011
MPORTANT MATTERS N4
t represent authentic obligations owed by the company.
e. pledging, assigning, collateralizing, made to incur the specific payable.

e. subsidiaries, major suppliers.
gement, it was found that there were no assets pledged

nd that Grace Corporation did not have any transactions
elated parties, such as subsidiaries and major suppliers.
Prepared byDate:
EAU 2/15/2012
Reviewed by
Date:
SSM 2/15/2012

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sey her epa

LIABILITIES AND EQUITY

1,100,000.00 4,710,930.00 10,026,529.00 505,300.00

1,050,500.00 10,734,675.00 0.00 457,850.00

14,232,159.00 13,132,159.00 1193.83%

11,125,960.00 10,075,460.00 959.11%

Net Sales UA 0.00 0.00

101 Cash in Bank C

ADJUSTED BALANCE 2009 ADJUSTED BALANCE 2010

Cash flows from operating activities

Interest paid 0.00

Cash flows from investing activities 0.00

Cash flows from financing activities

Net increase in cash and cash equivalents

2 Receivable from officer/employees

3 Petty Cash Fund

2 Investments in Time Deposits

4 Loss from Decrease in Fair Value- Philex Mining

E1 1 Accounts Receivable - Gwendo Reyes

2 Receivable from Employees - Anna Reyes

E2 1 Accounts Receivable JR Alano Trading

E4 1 Allowance for bad debts

E5 1 Accrued Interest Receivable

F1 1 Cost of Goods Sold

2 Cost of goods sold

4 Cost of goods sold

6 Cost of goods sold

F8B 1 Inventory Shrinkage

2 Allowance for Inventory Write-Down

N5 1 Taxes and Licenses

2 Light, Water & Electricity

hilex Mining 700,000.00

BALANCE UNADJUSTED PAJE AUDITED

TOTAL BILLS AND FRACTIONAL DENOMINATIONS

Total Amount of Fund Per Books or Receipt

I hereby certify that the above fund of P1

1. The PNB Check #203 is a post-dated check.

4. The check for deposit is number with OR #118-122

the amounts are match.

Cash Count Sheet

Denomination Quantity Amount

Petty Cash Fund per Ledger C1.3 10,000.00

re than the available petty cash fund.

Reviewed by: Date:

The sum of:

The sum of:

The sum of:

The sum of:

The sum of:

The sum of:

The sum of:

The sum of:

The sum of:

The sum of:

The sum of:

The sum of:

The sum of: