. © FIRST PREBOARD EXAMINATION CRC-ACE REVIEW The Protea! CPA Ronee OL ‘B rss-9091 /7as-908 SOLUTIONS TO AUDIT PROBLEMS: ‘OCTOBER 2019 BATCH hte oh SSR ze Se vain WES as ee rote ote Tae tetas teens net a ene SiBo « “BUS sans | wakonte tose Bie sence 82 cual em "Soe ee eee ae et aot Sat ! seine “7 ; ine : te tp tt 00 amo ie $ ues . ae a Roe eee ere) ren ae ae cred = Lundertooting of cash recempts = = _overduoring of cash disbursements — a SE teeta ‘0 ecco ta we eat ene as Laas erbankwatcment beging, anki unk dein ending moo “Sie ata ao Mime “at ea Sr pe = 009 « OC - May 3 — 12,000 (02.000) Seas a Se poe se ee ee ‘a ance ern a sd talc pb Spe anes per (06 Myemcnhy acci So ca Scnndeg ech na 4.00 - 200) (Th cece 80 ed Nyt edeProblem 3 Suboobuad ‘ash i bank fadueted) sae ‘per bank statement less: OC Nov 15 we C852) _aaare 29,616 collections payments issuance of shares (300,000 + 20,000) 320,000 seal propery purchased for cash 200,000 proceeds of loans £0,000 [Payment for fumitares and Sxtutes (29,000 - 6,000) 23,000 ‘proceeds of notes - bank 52,000 ‘expenses pad (other than purchases) 60,756 collections from credit customers (340,000 -85,380) 254,620 payments for purchases 251,636 (686,620 $35,392 tonal ales 30,900 cost tio 0% cont of sles : 24,000 faventory ead 3,920 total purchases 297,920 alates (46288) ‘payment or purchases 251636 calles 684,620 payments 535302 ‘cath balance account) 1s208 Identified cash balance (accosted fo) Ey cash shor hen Problem 4 ‘Uareconded sales setums causes an overstatement of net income by {00,000* 20% = 6,000 ‘Aa adjusting etry will ase the net income to "decrease by 26,000" IE "Si" ais to record the CM, net sales, goss profit and eventually et income ‘would be over by 10,000 48,000 / 150, 320 units 50*320 16,000 overstatement of A/R to Tom ‘Receivable fom Hanks is couecly stated since freight agreement was {ol shipping point and sale/receivable shouldbe recorded in 2021 djing entry in lation to Annie Company: AP 45,000‘emmctio sles conte io which Beso 25000 13000) R000 siping dee 12/28/20, sipping dete 12/31/20 sso oe eee ‘30000, = ant, <90Rcton fr goods sea ot on contigenet seconded a tle “hein di 5/8/az0 (0420012500 (4200) 2500 aan (os.00) = 400 ‘conection fr ales eon i Jn wade {0b shipping poi seat nea at ale seca shipping date 12/31/2020 21p0 __qa200 _21,900 _18200 iE is Base sean 4 1. Noadhsuments ae mide to invention since the oad ‘wer incoed inthe psi count made Problem 6 inventory balance, unadjusted 76,050 foods out on consignment 11,000 (good purchased in-tamsit under fb shipping point 2,700 ‘goods sold fob shipping in tassit a balance sheet date clones laced in tanger tlanen 500) good told fob destination in tani at balance sheet date ‘hich were excluded inthe inventory balance 2,000 goods sold fo destination in transit at balance sheet date ‘which were excluded in the inventory balance inventory balance, adjusted Fe Effect to net income under (over statement “understatement of ending inventor i relation to ‘goods out on consignment (cos oves) 11,000 ‘understatement of purchases in relation to ‘goods purchasedin-transit fob shipping point (cos une) 2,700) understatement of ending inveatory in relation to goods purchased in-trnsit fob shipping point (cos oes) 2,700 ‘overstatement of ending inventory in relation to goods sold in-trnsit fob shipping point (cos unde) (8,500) understatement of ending inventory in relation to goods sold in transit fob destination (cos ove) 2,600 ‘oremtatement of purchases in relation to ‘goods in transi fob destination (cos over) 3,500 ‘overtatement of sales in relation to [goods sn trait fob destination (20,500) ‘undenstatemeat of ending inventory in lation to rode eld mi 8200 ne oreProblem 7 effect on ae income if no adjusting entry was made a under (oxen) 4 oremtatement of expense (18,000 ° 7/12) or 3 ovemttement of income 36,000 +2/6 Gann) 6, understatement of income (100,00 * 12% * 30/360) 1,000 understatement of expenses (60,000 * 10/30) 20,000) ‘overstatemnet of net inconie (20,500) Problem § Gah a/R ABD Sales Purchases A/D spadsted blancs : 500,900 1,300,000 (000) 6,750,900 4,380,000 600,000 ‘ondelivered checks 150,000 150,000 ‘unreconded purchises (100,000 99%) 9,900 98,000 wateconded purchase retums (0,000 * 9870) (20,000) 0,000) ‘worecorded ales 0,000 50,000 ‘onecoded debit memo fran NSF check 6.000) 5,000 _—_ 45,000 385,900 (6000) 6,800,000 4368,000 768,000 requzed allowance for bad debts (1,308,000 1.5%) 20,325 ‘woadjted allowance (debi balance) (8,000) ‘ad des expense 23,305 Tes Worth It By: Masion Stroud 2.Corinthians 112433 “can't do is” Robert said, throwing his pencil down in despair. “It's just too had” Reading, writing, and speling seemed impossible to our dyslexse 9-yearold. Atlas, a solution was offered. But it was tough, We had to do reading and spelling practice with him for 20 minutes every cvening—without exception. Sometimes we just dida’t feel ike doing it, and at times we despaired of seeing progress. But we were committed to getting Robert's reading age and his chronological age to match, so we battled on. ‘Affce 2 1/2 yeas all the tears and struggles seemed infinitely worthwhile. Robert learned to read and spel. ‘And we all leamed patient endurance. ‘The apostle Paul suffered all sorts of hardships as he pursued his goal of sharing the good news of Jesus with those who had never heard. Persecuted, beaten, imprisoned, and misunderstood, sometimes he faced, ‘eath itself 2 Cor. 11:25) But the joy of seeing people respond to his mestage made itall worthwhile. Ifyou feel thatthe tsk God has called you to is too hard, remember that the spiitual lessons and joy that are wrapped up in the journey may seem hidden at fist, but they are certainly there! God will help you find them. Sometimes we learn that hardships ‘Were blessings in disguise, ‘That earnest work and faith in God ‘Were proven to be wise. —Hess ‘The journey Daily Bread Minisees