NAME : JULIE ANN G.

PILI
NOEL ANGELO RIVERA

In connection with your audit of the financial statements of MA-CPA KO PUHON CORPORATION
for the year ended December 31, 2014, you conducted a surprise count of the company’s petty cash
fund and other cash which might be on hand with the cashier, Ms. Julie Ann Pili, CPA, and your count
disclosed the following:

Bills Coins
100.00 5 pieces 10.00 50 pieces
50.00 2 pieces 5.00 15 pieces
20.00 10 pieces 0.25 32 pieces

Checks
Date Payee Maker Amount
Dec 30 Cash Custodian P 1,200
Dec 30 MA-CPA KO PUHON CORP. Benjamin Laden Corp. 14,000
Dec 31 MA-CPA KO PUHON CORP. Benjamin Laden Corp. 1,680
Dec 31 MA-CPA KO PUHON CORP. Benjamin Laden Corp. 17,800
Dec 31 MA-CPA KO PUHON CORP. Ateneo, Inc. 8,300
Dec 31 Taiwan Corp. Benjamin Laden Corp. 27,000

I.O.U’s
Date Maker Amount
Nov 1 Richard Yap, Clerk P 2,500
Nov. 2 Percival, messenger 1,500
Nov. 3 Leon Key, accountant 1000

Unreplenished Vouchers
Date Payee Description Amount
Dec 23 Mario Lansang, sales Advance for trip to P 20,000
messenger Tagaytay City
Dec 28 Central Post Office Postage Stamps 1,620
Dec 29 Messengers Transportation 150
Dec 29 Byte Inc Computer Repair 800

You also found that the petty cash fund amounted to 50,000.

Further investigation also disclosed that the cash sales on January 2, 2015 amounted to P55,000
as shown by the sales records while Cash Receipt Book and Bank Deposit Slip showed that only 25,000
was deposited in the bank on January 4, 2015. You also found a pay envelope of Juan McDonut. The
envelope was marked “Unclaimed” and opened with the amount 20,000.

You also gathered the following information in conducting an audit of the cash account of MA-
CPA KO PUHON CORP. :
 a. Balance per bank, December 1, 2014 P 145,000
b. Total bank receipts (credits) in December 346,000
c. Balance per bank, December 31, 2014 114,500
d. Outstanding checks, Nov. 30 2014
(including P12,000 paid by the in December) 67,000
e. Outstanding checks, December 31, 2014
(including checks issued in November) 94, 162
f. Deposit in transit, November 30, 2014 39, 458
g. A customer’s check received on December 4, 2014,
was returned by bank on December 7 marked
“NSF.” It was redeposited on December 8, 2014. The
Only entry made was to take up the collection on
December 4, 2014. 11,143

You’re are also provided by the following information from its accounting records for the year
ended December 31, 2014.

Inventory at December 31, 2014 (based on physical count) 2,880,000

Accounts Payable at December 31, 2014 1,650,000
Net sales 5,540,000

You obtained the additional information below:

a. Merchandise with a cost of P50,000 was included in the inventory count and the related
purchase was not recorded. The goods have been shipped by the vendor F.O.B. Destination and
only the invoice had been received during 2014.

b. Merchandise costing P100,500 was put on consignment to the CUTE KO Company and was
excluded in the final inventory. No sale was recorded.

c. Goods shipped to a customer F.O.B. Destination on December 26, 2014 were in transit at
December 31,2014 and had a cost of P70,000 and is excluded in the count of final inventory.
Issued a sales invoice for P55,000 as inspected by the customer on January 2, 2015.

d. Received goods held on consignment from KAYA RA NI Company amounting to P100,000. These
were included in the physical count of goods and in accounts payable at December 31, 2014.

e. Retailers have goods of P880,000 at cost (700,000 at retail) on consignment from MA-CPA KO
PUHON Company, the consignor, at their stores on December 31,2014.

f. Goods were in transit from a vendor. The goods were shipped F.O.B. Shipping point on
December 30, 2014, and the invoice was P75,000.

Also, your audit of accounts receivable and other related accounts disclosed the following:

1. Accounts Receivable amounting to 500,000 as of December 31, 2014

 2. An aging of the accounts receivable as of December 31, 2014 revealed the following:
Age Category Net Debit Balance Amount to which the allowance is to
be adjusted after adjustments and
corrections have been made
Under 2 mos. 171,000 3%
2 to 3 mos. 83,000 4%
3 to 4 mos. 25,000 5%
Over 4 mos. 12,000 3,000 definitely uncollectible;
remainder is estimated to be 70%
collectible
3. Doubtful Account Expense have the following entries:
a. A credit for 1,296 on Novemebr 1, 2014, and a debit to allowance for
Uncollectible Accounts because of bankruptcy. P 1,296 write-off of
receivables relates to 3-4 months day age category
b. A debit on December 31 for the amount of the credit to Allowance for
Doubtful Accounts
4. The Allowance for Bad Debts account is presented below:
Balance
Beginning Balance- Jan 1, 2014 7,800
Write Off-Sept 1, 2014 Debit 1,380 6,420
Provision (7% of 500,000) Credit 35,000 41,420
5. There is a credit balance in account receivable (2 to 3 mos.) of 3,000 which
represents and advance on sales contract

Furthermore, the accompanying analyses of the Property, Plant and Equipment and related
accumulated depreciation accounts have been by prepared by the chief account of the client. The
beginning balance is already provided based on you prior audit working paper.

Beginning Balances
Description
COST ACCUMULATED DEP.
Land 4,000,000 -
Building 2,568,000 1, 177,000
Equipment-A 1,172,000 512,750

The following are methods of depreciation used for each type of asset by MA-CPA KO PUHON CORP
Description Date of Purchase Useful life Method
Land Jan 1, 2009 - -
Building March 31, 2011 6 years Straight Line
Equipment-A July 1, 2010 8 years Straight Line

The following are transactions during 2014:

1. Purchased land and building on November 1, 2014 amounting to 10,000,000 with a cost of
400,000 and 600,000 respectively. The building has estimated useful life of 10 years.
2. Equipment B with and invoice price of 315,000 with terms 5/10, n/30 was purchased on
March 1, 2014. Installation and testing cost amounting to 4,000 and 6,000 respectively was
 incurred. Equipment have a useful of 5 years and will be depreciated using the straight line
method without residual value.
3. On June 30, 2014, Equipment B was for 500,000

Requirement:
A. CASH
a. Prepare Cash Count Sheet and determine the cash shortage or overage
b. Compute the following:
1. Total book receipts in December
2. Total bank disbursement in December
3. Total book disbursement in December

B. INVENTORY
a. Compute the adjusted balance of the following:
1. Inventory
2. Accounts Payable
3. Net Income

C. ACCOUNTS RECEIVABLE
A. Compute corrected balance of the following:
1. Accounts Receivable
2. Allowance for Doubtful Accounts

D. PPE
A. Prepare an audited Lapsing Schedule of the PPE
ANSWER KEY

 CASH
(A)
MA-CPA KO PUHON CORPORATION
Cash Count

Bills 100.oo x 5 pieces = P 500

50.00 x 2 pieces = 100
20.00 x 10 pieces = 200 800
Coins
10.00 x 50 pieces = 500
5.00 x 15 pieces = 75
0.25 x 32 pieces = 8 583 1,383

Checks
Date Payee Maker Amount
Dec 30 Cash Custodian P 1,200
Dec 30 MA-CPA KO PUHON CORP. Benjamin Laden Corp. 14,000
Dec 31 MA-CPA KO PUHON CORP. Benjamin Laden Corp. 1,680
Dec 31 MA-CPA KO PUHON CORP. Benjamin Laden Corp. 17,800
Dec 31 MA-CPA KO PUHON CORP. Ateneo, Inc. 8,300
Dec 31 Taiwan Corp. Benjamin Laden Corp. 27,000 69,980

I.O.U’s
Date Maker Amount
Nov 1 Richard Yap, Clerk P 2,500
Nov. 2 Percival, messenger 1,500
Nov. 3 Leon Key, accountant 1000 5,000
Unreplenished Vouchers
Date Payee Description Amount
Dec 23 Mario Lansang, sales Advance for trip to P 20,000
messenger Tagaytay City
Dec 28 Central Post Office Postage Stamps 1,620
Dec 29 Messengers Transportation 150
Dec 29 Byte Inc Computer Repair 800 22, 570
TOTAL CASH COUNT 98,933

CASHIER’S ACCOUNTABILITY
Petty Cash Fund 50,000
Unclaimed Salary 20,000
Undeposited Sales 30,000 100,000
CASH SHORTAGE 1,067
 (B)
b1)
Bank receipts (credits) in December 346,000
Less: Deposit in transit, November 30 39,458
NSF check redeposited in December 11,143 50,601
Book receipts (debits) in December 295,399

b2)
Bank balance, December 1, 2014 145,000
Add: Bank receipts in December 346,000
Total 491,000
Less: Bank balance, December 31, 2014 114,500
Bank disbursement in December 376,500

b3)
Bank disbursements in December 376,500
Add: Book disbursement in December
but not in December bank disbursements:
Check issued in December, outstanding
at December 31:
Outstanding checks, Dec. 31 94,162
Less: Checks issued in Nov.,
Still outstanding at Dec. 31 55,000 39,162
Total 415,662
Less: Bank disbursements in December but
not in book disbursements in December
November outstanding checks
paid by bank in December 12,000
NSF Check 11,143 23, 143
Book disbursements (credits) in December 392,519

 B.) INVENTORY
Inventory Accounts Payable Net Sales
Initial Amounts 2, 880,000 1,650,000 5,540,000
Adjustments :
a. (50,000)
b. 100,500
c. 70,000
d. (143,000) (143,000)
e. 880,000
f. 9,000 9,000
Net Adjustments 866,500 (134,000) 0
 Adjusted balance A1) 3,746,500 A2) 1,516,000 A3) 5,540,000

 C.) ACCOUNTS RECEIVABLE

Unadjusted Adjustments Adjusted % Required
Allowance
Under 2 months 200,000 200,000 3% 6,000
2 to 3 months 150,000 3,000 153,000 4% 6,120
3 to 4 months 100,000 (1,296) 98,704 5% 4,935.2
Over 4 months 50,000 (3,000) 47,000 30% 14,100
P500,000 (4,080) A1) P450,920 P31,155.2

A2) Allowance for Doubtful Accounts:

Unadjusted Balance 41,420
Uncollectible over
4 mos. (3,000)
ADA 12/31/14 38,420
Required AD 31,155.2

 D.) PROPERTY, PLANT and EQUIPMENT

LAPSING SCHEDULE OF PPE
COST LAND BUILDING EQUIPMENT
Beginning Bal. 4,000,000 2,568,000 1,172,000
Additions 4,000,000 (A) 6,000,000 (A) 310,000 (C)
Disposals - - (310,000)
Ending Balance 8,000,000 8,568,000 1,172,000
ACC. DEP.
Beginning Bal. - 1,177,000 512,750
Provisions - 528,000 (B) 167,167 (D)
Disposals - - (20,667) (D)
Ending Bal. - 1,705,000 659,250
BOOK VALUE 8,000,000 6,836,000 512,750

A. Land 400,000 4/10 4,000,000

Building 600,000 6/10 6,000,000
1,000,000 10,000,000
B. 2012
Depreciation Expense- Old bldg.
(2,568,000/6yrs) 428,000
Depreciation Expense-New bldg.
(6,000,000/10yrs)x2/12 100,000
528,000
C. Purchase Price (net of discount) 300,000
Installation and testing cost 10,000
310,000
D. 2012
Depreciation Ex.- Old Equipment
(1,172,000/8yrs) 146,500
Depreciation Ex-New Equipment
(310,000/5yrs)x4/12 20,667
167,167