‘CPA REVIEW SCHOOL OF THE PHILIPPINES (CPAR) ~ MANILA FINAL PREBOARD EXAMINATION INDAY /8:004M ~ 11:008M AUDITING PROBLEMS 00 AR 72,2018 / SU = ©. Bad debt expense 11,560 ‘Allowance for bad debts 11,560 3. What isthe net realizable value of Victory Company’ accounts receivable at December 31, 2018? | A. 3,071,840 B. 3,200,000 C. P3,083,400 D. P3,188,440 4. Victory Gompany should report bad debt expense for 2018 of A. P308,440 B. 128,160 . P331,560 D. P320,000 ‘5. What is Victory Company's total credit sales for the year ended December 31, 20187 ‘A. P8,290,000 B. 8,000,000 C. 8,331,560 D. P7,871,840 spetaneneennneeennnnnnnnnen=G00000000- PROBLEM NO. 2 CAINTA COMRANY uses a perpetual inventory system and reports inventory at the lower of FIFO ‘cost or net replizable value. Cainta's inventory control account balance at june 30, 2018, was 442,040. A physical count conducted on that day found Inventory on hand worth P440,400.. Net realizabie value for each inventory item held for sale exceeded cost. An investigation of the discrepancy disclosed the following: 1 4 6 ‘Goods worth P13,200 held on consignment for Bugok Co. had been included in the physical count. = Goods 2,400 were purchased on credit from Amor Co. on June 27, 2018, on FOB shipping ppint terms. The goods were shipped on June 28, 2018, but, as they had not arrived bby June 30, 2018, were not included in the physical count. The purchase invoice was received ‘and processed on June 30, 2018, ‘Goods costing P4,800 were sold on credit to Acero Co. for P7,800 on June 28, 2018, on FOB desunation terms. The goods were stl in transit on une 30, 2018, The sales invoice wes processed and recorded on June 29, 2018. Goods costing P5,460 were purchased on credit (FOB destination) from San Miguel Co. on June 28, 2018. The goods were received on June 29, 2018 and included in the physical count. The purchase invoice was received on July 2, 2018. (On June 30, 2018, Cainta sold goods costing 12,600 on credit (FOB shipping point) terms to Pisaro Corp. for P19,200. The goods were dispatched from the warehouse on June 30, 2018, but the sales invoice had not been processed at that date. : ‘Damaged inventory items valued at P5,300 were discovered during the physical count. These Items were stil recorded on June 30, 2018 but were omitted from the physical count records pending their write-off. Questions: 6. What is the adjusted inventory balance on June 30, 2018? ‘A. Pa2a}800 B. P421,200 CC. 'P445,000 D. P434,400 7. What adjustment should be made to Cainta’s sales reveriue for the year ended June 30, 2018? | AL Net ‘of P11,400 C. Increase of P19,200 B. Net of PLL,400 D. Decrease of P7,800 8 Cainta’s pccounts payable at June 30, 2018, should be A sed by P5,460 C. Decreased by P5,300 B. Increased by P5460 D. Increased by P160‘CPA REVIEW SCHOOL. OF THE PHILIPPINES (CPAR) - MANILA FINAL PREBOARD EXAMINATION ‘AUDITING PROBLEMS —_ APR. 22, 20187 SUNDAY /8:0064 = 11:00AM 13, ‘What is the net book value of the Trucks on December 31, 2018? ‘8. 348,000 B. 228,500 C. Pa14,000 1. P994,000 114, The total depreciation expense recorded for the 4-year period (2015-2018) is overstated by A Piss, B. P265,500 C. P287,500 D. 275,500 15, Assuming that the books have not been closed for 2018, what is the compound Journal entry on December 31, 2018 to correct the company's errors for the 4-year period (2015- 2018)? ‘A. Accumulated depreciation 665,500 Trucks 480,000 Retained earnings 45,500 Depreciation expense 140,000 B. Accumulated depreciation 629,500 Trucks 480,000 Retained earnings 9,500 Depreciation expense 140,000 C Accumulated depreciation 665,500 Trucks 665,500 D. Accumulated depreciation 665,500 Trucks 480,000 Retained earnings 185,500 .--------000000000-~ PROBLEM NO. 4 “The following independent situations relate to the audit of cash. ‘Myla Limpot is the cashier of the BUSTOS GLASS COMPANY. As representative of ARF & Co., CPAs, you were assigned to verify her cash on hand in the morning of Jenuary 4, 2019. You ‘began to count at 9:00am in the presence of Miss Limpot. In the course of your counting yOu found currencies in paper bills and coins together with checks, vouchers and other items, which are listed below: Bills 25 hundreds; 130 fifties; 142 twenties Coins P10 1 roll and 10 tose (20 pieces to 2 roll) 5 4 rails (50 pieres toa roll) 1 2rdils and 29 loose (50 pieces to a rol!) . Checks 7 Date Payee ‘Amount Josue Crisarito, Asst. Manager 12/22/18 ‘Bustos Glass Company P1,200 Myla Limpot, Cashier 12/27/18 Bustus Glass Company ‘800 Tous A. Davide, Janitor 42/19/18, 700 R. Tirador | 12/21/18 500 Peter 1, Bookkeeper 12/23/18 300 Petty Cash Vouchers for Replenishment . Date Account Charaed Amount Lando Bilcoa, Messenger 1215/18 Advances to employees P200 Rosemary pany 12/16/18 ‘Supplies 290 ‘Speed Liner| AZATNB Freight-in 365 PHL Posts (stamps) 12/17/18 ‘Supplies: 600 A. Bellas, nter 12/19/18 Repairs 900 8 Tallos. 12/20/48 Miscellaneous expenses, 308(CPA REVIEW SCHOOL OF THE PHILIPPINES (CPAR) - MANILA [FINAL PREBOARD EXAMINATION AUDITING PROBLEMS APR. 22,2018 / SUNDAY /8:008M — 11-008 18. The adjusted book balance on December 31 is A P524,548 B. P1,283,848 Cc. Pe40,248 D., P1,062,048 19, The adjusted book balance on November 30 is AL 1,062,048 8. Pi,283,848. C. P524,548 D. P840,248 20, The adjusted bank receipts and disbursements for December are Receipts Disbursements A 12,753,806 12,216,306 B 12,552,006 12,214,306 c 12,753,806 111,590,406 °. _22/552,006 12,236,306 PROBLEM NO. 5 “The HVR Company included the following in its notes receivable as of December 31, 2018: Note receivable from sale of land 2,640,000 ‘Note receivable from consultation 3,600,000 [Note receivable from sale of equipment 4,800,000 ‘The feliowing transactions during 2018 and other information relate to the company’s notes receivable: 2) On January 1, 2018, HVR Company sold a tract of land to Triple X Company. The land, purchased” 10’ years ago, was cared on HVR's books at P2,500,000. HVR received Noninterest-bearing note for P2,640,000 from Triple X. ‘The note Is due on December 31, 2OL5, Ther ws i eaibed charger fr enc, The preatrg ase res er this note on January 1, 2018 was 10%. b) On January 1, 2018, HVR Company received a 5%, P3,600,000 promissory note in exchange for the consultation services rendered. The note will mature on December 31, 2020, with Interest regeivable every December 31. The fair value of the services rendered is not readily esermirate, The prevaling rate of eee fo 8 noe ofthis ype was 10% on January 4, 18. ©) On January 1, 2018, HVR Company sold an old equipment with a canying amount of 4,800,000, receiving 7,200,000 note. The note bears an interest rate of 4% and is to be repaid in 3 Installments of P2,400,000 (plus interest on the outstanding balance). HVR received ttfe frst payment on December 31, 2018. There is no establisfied market value for the equit ‘The market interest rate for similar notes was 14% of January 1, 2018. Note: Round|off present vslue factors to four decimal places and final answers to the nearest hundred. 21, What ambunt of consultation fee revenue should be recognized in 2018? A. 3,192,500 B. P3,500,000 C. P2,705,000 1. P4,047,500 it should be reported as gain on sale of equipment? ,000 B. P994,800 C. P1,237,300 D. P1,162,700 int to be reported as noncurrent notes receivable on December 31, 2018, is 200 B. P5,477,500 C. P6,037,300 D. P7,877,600 to be reported as current notes receivable on December 31, 2018, is 000 2,400,200 C. P7,440,000 D. 4,404,900 Interest ‘ncome should be recognized in 2018? ‘A. P1,378,700 2,160,500 c. 974,200 D. 756,000