Auditing - Punongbayan & Araullos Auditing Problems...

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EASY 1. On July 01, 2007, one of FLOYD INC.'S delivery trucks was destroyed in an accident. On that date, the truck's book value was P900,000. On July 15, 2007, FLOYD INC. received and recorded a P42,000 invoice for a new engine installed in the truck in May 2007 and another P6,000 invoice for various repairs. What amount should FLOYD INC. use to determine the gain or loss on disposal of the truck? a.P900,000 b.P942,000 c.P948,000 d.P936,000 2. Henry Company had the following bank reconciliation at March 31: Balance per bank statement, March 31 P 93,000 Add deposit in transit 20,600 P 113,600 Less outstanding checks 25,200 Balance per books, March 31 P 88,400 Data per bank statement for the month of April follow: Deposits P 116,800 Disbursements P 99,400 All reconciliation items at March 31 cleared through the bank in April. Outstanding checks at April 30 totaled P15,000. What is the amount of cash disbursements per books in April? a.P 89, 200 b.P 99,400 c.P109,600 d.P114,400 3. BRAND CO. reported P9,000 of net income for 2007. The correct net income however was P11,000. It was determined that the ending inventory was overstated by P1,000. The only other error was with the beginning inventory which must have been: a. Understated by P1,000 b. Understated by P3,000 c. Overstated by P1,000 d. Overstated by P3,000 4.* On December 30, 2007, SWIFT CO. shipped to a customer merchandise with selling price of P37,500; terms net 30, FOB Shipping Point. The sale which is 125% of cost was recorded in January 2007 when the check was received from the customer. Ending inventory was determined by physical count on December 31, 2007. As a result of the above transactions, SWIFT CO.’s cost of goods sold for the year ended December 31, 2007 was: a. Understated by P3,000 b. Overstated by P30,000 c. Overstated by P37,500 d. Correctly stated 5. BART Company started operations on January 01, 2008. The following are available as of June 30, 2008: Purchase of merchandise P 450,000 Inventory, June 30, 2008 75,000 Goods were sold at 50% above cost; 75% ofsales were on account Estimated bad debts 1% of credit sales Collections from charge customers 315,000 Allowance for doubtful accounts, June 30,2008 after write off of uncollectible accounts 3,903.75 The outstanding accounts receivable as of June 30, 2008 were: a.P110,000 b.P106,875 c.P106,560 d.P285,000 6. PRIME Co. received from a customer a one year, P500,000 note bearing annual interest of 8%. After holding the note for six months, PRIME discounted the note at Asian Bank at an effective interest rate of 10%. At the date of discounting, PRIME should recognize a. P 40,000 interest revenue b. P23,810 interest revenue c. P13,000 interest revenue d. P 4,762 interest expense 7. Information pertaining to Trace Company for the month of August appears below: Balance per bank statement P 310,000 Balance per books 187,500 Deposit in transit 70,000 Service charges 2,500 Note collected by bank 75,000 Outstanding checks ? An analysis of the cancelled checks returned with the bank statement reveals the following: a. Check for the purchase of merchandise was drawn for P155,000 but was recorded as P150,000.
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Auditing - Punongbayan & Araullos Auditing Problems...

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