PRACTICE PB AP WITH KEY 1617 - La REINVENTING EDUCATION OF...

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La ConsolacionCollegeManila REINVENTING EDUCATION OF THE FUTURE School of Business & Accountancy ACCOUNTING REVIEW AUDITING PROBLEM INSTRUCTION: Select the correct answer for each of the following questions. Mark only one answer for each item by shading the box corresponding to the letter of your choice on the answer sheet provided. STRICTLY NO ERASURES ALLOWED. 1. Your audit of Fernandez Company shows tha a gross profit of P180,000, was realized. Net income was 50% of gross profit. Inventry begginning was P90,000, total gross purchases of P140,000, and purchases returns of 20,000. Physical count of ending inventory amounted to P120,000. Fernandez's sales for the year showed a balace of P270,000. Based of your anlysis what shoud be the sales of Fernandez? a. P300,000. b. P330,000. c. P90,000. d. Correctly presented. Ftg 2. Your audit of inventory account of Matson Company at December 31, 2015, disclosed the following items: Inventory Amount ————————— Merchandise out on consignment at sales price (including markup of 40% on selling price) P15,000 Goods purchased, in transit (shipped f.o.b. shipping point) 12,000 Goods held on consignment by Matson 13,000 Goods out on approval (sales price P7,600,cost P6,400) 7,600 As auditor, the inventory account at December 31, 2015, should be reduced by 3. At the close of its first year of operations, December 31, 2015, the Kemp Company had accounts receivable of P540,000, after deducting the related allowance for doubtful accounts. During 2015, the com- pany had charges to bad debt expense of P90,000 and wrote off, as uncollectible, accounts receivable of P40,000. What should the company report on its balance sheet at December 31, 2015, as accounts receivable before the allowance for doubtful accounts? 4. On December 31, 2015, Damon Corporation sold for P50,000 an old machine having an original cost of P70,000 and a book value of P20,000. The terms of the sale were as follows: P10,000 down payment P20,000 payable on December 31 each of the next two years
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The agreement of sale made no mention of interest; however, your analysis shows that 9% would be a fair rate for this type of transaction which the company is using. Damon’s notes receivable net of the unamortized discount on December 31, 2015 was P70,364. What shold be the correct notes receivable rounded to the nearest peso ? ftg ------------------------------
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