AA 3102 - Group 7

Leader: Jorolan, Kiana F.

Members:
Oracion, Izel A.
Recla, Sephia Rhonymae E.
Rodil, Kurt Matthew M.
Rudinas, Karen Niña Louise L.

PROBLEM 1

Y COMPANY
Adjustments
December 31, 20X7

Reference Amount
Requirement A:Computation of Inventory Adjustments:
Material in Car AR38162 RR#1063 ₱ 8,120
Materials stranded en route SI#966 15,416
Cost of unsalable inventory (1,250)
Total adjustments - December 31, 20X ₱ 22,286

Requirement B: PAJE 1
Purchases 2,183.00
To record chemicals in the
Accounts
warehousePayable
but for which an invoice 2,183.00
was not received - RR#1060

PAJE 2
Accounts Receivable 12,700.00
Sales 12,700.00
To record sales loaded and sealed - SI#968

PAJE 3
Sales 19,270.00
Accounts Receivable 19,270.00
To reverse entry made on SI#966

PAJE 4
Claims receivable 1,600.00
Purchases 1,250.00
To record claim against carrier for
Freight-in
damaged in transit/unsalable 350.00
chemicals
PAJE 5
Inventory 22,286.00
Cost of Goods Sold 22,286.00
To adjust physical inventory

PAJE 6
Sales 15,773.00
Accounts Receivable
To adjust for unshipped goods - 15,773.00
SI#969, SI#970, and SI#971

Prepared by:
GRP7 7.09.23
19,270/ 1.25
5,841 + 7,922 + 2,010
AA 3102 - Group 7
Leader: Jorolan, Kiana F.
Members:
Oracion, Izel A.
Recla, Sephia Rhonymae E.
Rodil, Kurt Matthew M.
Rudinas, Karen Niña Louise L.

PROBLEM 2

ENGINE WAREHOUSE SUPPLY COMPANY

Purchases Cut-off
August 31, XXXX

Receiving Date
Date Shipped Amount FOB Point
Report No. Received
679 8-29 8-30 ₱ 860 Destination
680 8-27 9-1 1,211 Origin
681 8-20 9-1 193 Origin
682 8-27 9-1 4,674 Destination
683 8-30 9-2 450 Destination
684 8-30 9-2 106 Origin
685 09-02 9-2 2,800 Origin
686 8-30 9-2 686 Destination

PAJE 1
Accounts Payable 4,568
Purchases 4,568

Prepared by:
GRP7 7.09.23

ENGINE WAREHOUSE SUPPLY COMPANY

Sales Cut-Off
August 31, XXXX

Included or Excluded from

Shipping
Document No.
Date Shipped Amount Per SalesAugust
Journal
310 8-31 ₱ 780 INCLUDED
 311 9-1 56 INCLUDED
312 9-1 3,194 INCLUDED
313 9-1 635 INCLUDED
314 9-1 193 INCLUDED
315 9-2 1,621 EXCLUDED
316 9-2 945 EXCLUDED
317 9-2 78 EXCLUDED
318 9-2 3,611 EXCLUDED

PAJE 2
Sales 4,078
Accounts Receivable 4,078

Prepared by:
GRP7 7.09.23

ENGINE WAREHOUSE SUPPLY COMPANY

Inventory Testing
August 31, XXXX

Receiving Report No. Cost

682 ₱ 4,674
683 450
Reduction of Inventory ₱ 5,124

Shipping Document No. Selling Price Cost

311 ₱ 56 39.20
312 3,194 2,235.80
313 635 444.50
Increase of Inventory ₱ 2,719.50

NET REDUCTION of
Inventory Required ₱ 2,404.50

PAJE 3
Inventory 2,404.50
Cost of Sales 2,405.50

Prepared by:
GRP7 7.09.23
UPPLY COMPANY
ut-off
XXX

Acquisition
Should be Journal
Was recorded Adjusments
recorded in
in August
August
YES YES -
YES YES -
YES YES -
NO YES (4,674)
NO NO -
YES NO 106
NO NO -
NO NO -
₱ (4,568)

PLY COMPANY

XX

cluded or Excluded from

August Adjustments
Per Audit
INCLUDED -
 EXCLUDED (56)
EXCLUDED (3,194)
EXCLUDED (635)
EXCLUDED (193)
EXCLUDED -
EXCLUDED -
EXCLUDED -
EXCLUDED -
₱ (4,078)

PLY COMPANY
ng
XX

Is it Included in Inventory?
Per Books Per Audit
YES NO
YES NO

Is it Included in Inventory?
Per Books Per Audit
NO YES
NO YES
NO YES
AA 3102 - Group 7
Leader: Jorolan, Kiana F.
Members:
Oracion, Izel A.
Recla, Sephia Rhonymae E.
Rodil, Kurt Matthew M.
Rudinas, Karen Niña Louise L.

PROBLEM 3

WP1 ISABELA COMPANY

Adjustments
December 31, 20X7

Inventory Accounts Payable Sales

Initial Amounts ₱ 1,250,000 ₱ 1,000,000 ₱
Adjustments:
Increase (Decrease)
1 ₱ (155,000) ₱ (155,000)
2 (22,000) NONE
3 NONE NONE ₱
4 210,000 NONE
5 25,000 25,000
6 2,000 2,000
7 (5,300) (5,300)
Total adjustments ₱ 54,700 ₱ (133,300) ₱

Adjusted amounts ₱ 1,304,700 ₱ 866,700 ₱

Prepared by:
GRP7 7.09.23

WP2 ISABELA COMPANY

Inventory Reconcilliation
December 31, 20X7

Inventories Sales Cost of Sales

Initial Amounts ₱ 1,250,000 ₱ 9,000,000 ₱
Adjustments:
Add (Deduct)
Parts held on consignment - C
Company (155,000)
Sold goods included in the inventory (22,000)
Goods sold on FOB Shipping Point 40,000
 Goods
Goods on consignment
were in transit from G 210,000
Company 25,000
Quarterly Freight Bill 2,000
Cash Discount (5,300)
Adjusted Balance ₱ 1,304,700 ₱ 9,040,000 ₱

PAJE 1
Accounts Payable 155,000.00
Merchandise Inventory 155,000.00

PAJE 2
Cost of Goods Sold 22,000.00
Merchandise Inventory 22,000.00

PAJE 3
Merchandise Inventory 210,000.00
Finished Goods 210,000.00

PAJE 4
Merchandise Inventory 25,000.00
Accounts Payable 25,000.00

PAJE 5
Merchandise Inventory 2,000.00
Accounts Payable 2,000.00

PAJE 6
Accounts Payable 5,300.00
Merchandise Inventory 5,300.00

Prepared by:
GRP7 7.09.23

WP3 ISABELA COMPANY

Sales cut-off Testing
December 31, 20X7

Selling Price Cost FOB

Description
Sales - December 2017 ₱ 28,000 ₱ 22,000 Shipping Point
Sales - January 2018 ₱ 40,000 ₱ 34,000 Shipping Point

PAJE 7
 Accounts Receivable 40,000.00
Sales 40,000.00

Prepared by:
GRP7 7.09.23

WP4 ISABELA COMPANY

Accounts Payable Renconciliation
December 31, 20X7

Accounts Payable
Unadjusted Balance ₱ 1,000,000
Adjustments:
Consigned
Goods wereGoods - C from
in transit Company
G (155,000)
Company 25,000
Quarterly Freight Bill 2,000
Purchase Discount - B Company (5,300)
Adjusted Balance ₱ 866,700

Prepared by:
GRP7 7.09.23

WP5 ISABELA COMPANY

Inventory Lead
December 31, 20X7

Unadjusted
Description W/P Ref
Balance 2016
Merchandise Inventory WP5 ₱ 1,250,000.00

TOTAL ₱ 1,250,000.00

Prepared by:
GRP7 7.09.23

WP6 ISABELA COMPANY

Proposed Audit Adjustments
December 31, 20X7

PAJE 1
Accounts Payable 155,000
Merchandise Inventory 155,000

PAJE 2
Cost of Goods Sold 22,000
Merchandise Inventory 22,000

PAJE 3
Merchandise Inventory 210,000
Finished Goods 210,000

PAJE 4
Merchandise Inventory 25,000
Accounts Payable 25,000

PAJE 5
Merchandise Inventory 2,000
Accounts Payable 2,000

PAJE 6
Accounts Payable 5,300
Merchandise Inventory 5,300

PAJE 7
Accounts Receivable 40,000
Sales 40,000

Prepared by:
GRP7 7.09.23
 Sales
9,000,000

NONE
NONE
40,000
NONE
NONE
NONE
NONE
40,000

9,040,000

Cost of Sales

(22,000)
34,000
 12,000

ISABELA COMPANY
Sales cut-off Testing
December 31, 20X7

Recorded as Sale? Included in Invetory

FOB Shipmate Date
Per books Per Audit Per books Per Audit
Shipping Point ### Yes Yes No Yes
Shipping Point ### No Yes No No
ANY
d
0X7

Adjusted Adjusted
PAJE
Balance Balance 2017
1 (155,000.00) 1,304,700.00
2 (22,000.00)
3 210,000.00
4 25,000.00
5 2,000.00
6 (5,300.00)
54,700.00 1,304,700.00
AA 3102 - Group 7
Leader: Jorolan, Kiana F.
Members:
Oracion, Izel A.
Recla, Sephia Rhonymae E.
Rodil, Kurt Matthew M.
Rudinas, Karen Niña Louise L.

PROBLEM 4 BERS COMPANY

Error Correction Schedule
December 31, 20X6

Uncorrected Items for Correction

Amounts (a) (b)
Statement of Comprehensive Income:
Sales Revenue ₱ 90,000.00 (12,000.00)
Less: Cost of Goods Sold 50,000.00
Gross Margin ₱ 40,000.00
Less: Expenses 30,000.00 7,000.00
Income ₱ 10,000.00 (7,000.00) (12,000.00)

Statement of Financial Position:

Dr. Accounts Receivable ₱ 42,000.00 (12,000.00)
Dr. Inventory 20,000.00
Dr. Remaining Assets 30,000.00
Cr. Accounts Payable 11,000.00
Cr. Remaining Liabilities 6,000.00 7,000.00
Cr. Share Capital, Ordinary 60,000.00
Cr. Retained Earnings 15,000.00 (7,000.00) (12,000.00)
Total ₱ 0.00

Prepared by:
GRP7 7.09.23
OMPANY
tion Schedule
er 31, 20X6

Items for Correction

(c) (d) (e) Corrected Amounts

(15,000.00) ₱ 63,000.00
6,000.00 15,000.00 (8,000.00) 63,000.00
₱ 0
37,000.00
(6,000.00) (15,000.00) (7,000.00) ₱ (37,000.00)

(15,000.00) ₱ 15,000.00
(15,000.00) 8,000.00 13,000.00
30,000.00
6,000.00 17,000.00
13,000.00
60,000.00
(6,000.00) (15,000.00) (7,000.00) (32,000.00)
₱ 0.00
AA 3102 - Group 7
Leader: Jorolan, Kiana F.
Members:
Oracion, Izel A.
Recla, Sephia Rhonymae E.
Rodil, Kurt Matthew M.
Rudinas, Karen Niña Louise L.

PROBLEM 5

Requirement:
1) Client:
Canyon Cattle Co. maintains 15,000 head of cattle on a 100 hectares, mostly unfenced, near the south rim of th
Problems:
The area where the cattles are located are mostly unfenced which makes the counting of the cattle to be difficu
Solution:
Construction of fences in the 100 hectares to group the cattle in one place. There should also be a tagging syst

2) Client:
Rhoads Mfg. Co., which has raw materials inventories consisting principally of iron ores loaded on freight cars o
Problems:
The iron ores on the freight cars can be difficult to count and access. Some iron ores may also have not been ta
Solution:
Each freight car should be inspected and recorded. If possible, the freight cars should be stopped when the tim
freight car should be recorded to properly include all inventory in the valuation regardless if the freight car is in t

3) Client:
Strawser Company, which is in production around the clock on three shifts, and which cannot shut down produc
Problems:
Since the equipment runs continuously, it will be difficult to inspect/record the finished goods inventory.
The finished goods should be segregated into a different area/warehouse for proper counting. Once separated,
Solution:
recording and this also allows for the finished goods inventory to be traced back to the WIP goods and the raw
different phases.
ced, near the south rim of the Canyon Grove in Butuan City

ing of the cattle to be difficult

hould also be a tagging system to prevent the same cattle from being counted twice

ores loaded on freight cars on a siding at the company's plant

s may also have not been taken into account if they were in freight at the time of the physical count of the inventories.

uld be stopped when the time comes to have a physical count on the goods for ease. The contents of each
dless if the freight car is in transit or if it is on the siding of the company plant

ch cannot shut down production during the physical inventory

ed goods inventory.
r counting. Once separated, only then should the finished goods be counted in order for their to be proper
he WIP goods and the raw materials inventory. This preventsthe same inventory to be counted twice in its
AA 3102 - Group 7
Leader: Jorolan, Kiana F.
Members:
Oracion, Izel A.
Recla, Sephia Rhonymae E.
Rodil, Kurt Matthew M.
Rudinas, Karen Niña Louise L.

PROBLEM 6

Audit objectives:
A.) Determine the existence of year-end recorded accounts payable and that the client has obligations to pay these liabilities.
1. Obtain a trial balance of payables and reconcile with the accounts payable subsidiary ledger
2. Vouch sales from throughout the year
6. Inquire of management concerning the existence of related party transactions
8. Test the reasonableness of general and administrative labor rates.
9. Confirm outstanding year-end balances of payables

B.) Establish the completeness of recorded accounts payable

1. Obtain a trial balance of payables and reconcile with the accounts payable subsidiary ledger
9. Confirm outstanding year-end balances of payables

C.) Determine that the presentation and disclosure of accounts payable are appropriate
1. Obtain a trial balance of payables and reconcile with the accounts payable subsidiary ledger
7. Test the computations made by the client to set up the accrual

D.) Determine that the valuation of warranty loss reserves is measured in accordance with PFRS
5. Vouch major warranty expenses paid during 20x8
10. Confirm warranty expenses payable as of the year-end
ons to pay these liabilities.
AA 3102 - Group 7
Leader: Jorolan, Kiana F.
Members:
Oracion, Izel A.
Recla, Sephia Rhonymae E.
Rodil, Kurt Matthew M.
Rudinas, Karen Niña Louise L

PROBLEM 7

Requirement 1
Prepare a proposed adjusting journal entry for the unrecorded accounts payable of Wil Company at A

Professional fees expense 1,000

Insurance expense 150
Prepaid insurance 1,650
Cost of goods sold 5,863
Marketable securities 2,125
Accounts payable 10,788

Prepared by:
GR7 7.10.23
able of Wil Company at April 30, 20X7. The amounts are material. (Do not deal with income taxes.)

expired insurance from April 1-30

unexpired insurance for 11 months

shares of Madison Ltd. bought from Mays and Sarge, Stockbrokers

AA 3102 - Group 7
Leader: Jorolan, Kiana F.
Members:
Oracion, Izel A.
Recla, Sephia Rhonymae E.
Rodil, Kurt Matthew M.
Rudinas, Karen Niña Louise L.

PROBLEM 8

Requirement 1a

MAR Company
Inventory - First-in, First-out (FIFO) Method
As of April 30, 20X3

Purchases Cost of Goods Sold

Date Qty Unit Cost Total Cost Qty Unit Cost
Beginning Inventory
April 4 400 5.10 2,040.00
Balance
April 5 100 5.00
200 5.10
Balance
April 11 300 5.30 1,590.00
Balance
April 12 200 5.10
Balance
April 18 200 5.35 1,070.00
Balance
April 26 500 5.60 2,800.00
Balance
April 27 300 5.30
200 5.35
300 5.60
Balance
April 28 100 5.60
Balance
April 30 200 5.80 1,160.00
Ending Inventory

Requirement 1b
 MAR Company
Inventory - Weighted Average Cost Method
As of April 30, 20X3
Purchases
Date Units Unit Cost Total Cost
April 1 100 5.00 500.00
April 4 400 5.10 2,040.00
April 11 300 5.30 1,590.00
April 18 200 5.35 1,070.00
April 26 500 5.60 2,800.00
Total Goods
April 30
Available for 200 5.80 1,160.00
Sale 1,700 5.39 9,160.00
Total Sales (1,400)
Ending Inventory 300 5.39 1,616.47

Requirement 2
MAR Company
Inventory - Moving Average Method
As of April 30, 20X3

Date Units Unit Cost Total cost

April 100 5.0000 500.00
April 4 - Purchase 400 5.1000 2,040.00
Balance 500 5.0800 2,540.00 2,540 / 500
April 5 - Sales (300) 5.0800 (1,524.00)
Balance 200 5.0800 1,016.00
April 11 - Purchase 300 5.3000 1,590.00
Balance 500 5.2120 2,606.00 2,606 / 500
April 12 - Sales (200) 5.2120 (1,042.40)
Balance 300 5.2120 1,563.60
April 18 - Purchase 200 5.3500 1,070.00
Balance 500 5.2672 2,633.60 2,633.60 / 500
April 26 - Purchase 500 5.6000 2,800.00
Balance 1,000 5.4336 5,433.60 5,433.60 / 1,000
April 27 - Sales (800) 5.4336 (4,346.88)
Balance 200 5.4336 1,086.72
April 28 - Sales (100) 5.4336 (543.36)
Balance 100 5.4336 543.36
April 30 - Purchase 200 5.8000 1,160.00
Ending Inventory 300 5.6779 1,703.36 1,703.36 / 300
Prepared by:
GR7 7.10.23
ny
ut (FIFO) Method
20X3

f Goods Sold Inventory Balance

Total Cost Qty Unit Cost Total Cost
100 5.00 500.00
400 5.10 2,040.00
500 2,540.00
500.00 (100) 5.00 (500.00)
1,020.00 (200) 5.10 (1,020.00)
200 1,020.00
300 5.30 1,590.00
500 2,610.00
1,020.00 (200) 5.10 (1,020.00)
300 1,590.00
200 5.35 1,070.00
500 2,660.00
500 5.60 2,800.00
1,000 5,460.00
1,590.00 (300) 5.30 (1,590.00)
1,070.00 (200) 5.35 (1,070.00)
1,680.00 (300) 5.60 (1,680.00)
200 1,120.00
560.00 (100) 5.60 (560.00)
100 560.00
200 5.80 1,160.00
300 1,720.00
33.60 / 500

33.60 / 1,000

03.36 / 300
AA 3102 - Group 7
Leader: Jorolan, Kiana F.
Members:
Oracion, Izel A.
Recla, Sephia Rhonymae E.
Rodil, Kurt Matthew M.
Rudinas, Karen Niña Louise L.

PROBLEM 9
Cosmo and Wanda Company
Income Statement (Inventory Loss)
For the year ended December 31

Beginning Inventory 170,000

Purchases 390,000
Purchase returns (30,000) 360,000
Total Goods Available for Sale 530,000

Sales 650,000
Sales Returns (240,000)
Net Sales 410,000
Gross Profit (410,000 x 40%) (164,000) (246,000)
Estimated Ending Inventory 284,000
Undamaged Goods on Hand (21,000 x 60%) (12,600)
Damaged Goods (Net Realizable Value) (5,300)
Inventory Loss by Fire 266,100

Prepared by:
GR7 7.10.23