University of Perpetual Help System Dalta

APPLIED AUDITING RJ CARASCO

QUIZ

1. Listed below are some items of inventory from Anecito Company that are in question during the audit. The company stores a
substantial portion of the merchandise in a separate warehouse and transfer damaged goods to a special inventory account.
1. Items in receiving department returned by customer, no communication received from customer 20,000
2. Items ordered and in receiving department, invoice not yet received from supplier 50,000
3. Items counted in warehouse by the inventory crew 70,000
4. Invoice received for goods ordered, goods shipped but not received (Anecito Company pays freight) 5,000
5. Items, shipped today, fob destination, invoice mailed to customer 5,000
6. Items currently used for window displays 10,000
7. Items on counter for sale per inventory count [not in (3)] 90,000
8. Items in shipping department, invoice not mailed to customer 6,000
9. Items in receiving department, refused by Anecito because of Damage [(not in (3)] 3,000
10. Items shipped today, fob shipping point, invoice mailed to customer 4,000
11. Items included in warehouse count, damaged, not returnable 8,000
12. Items included in warehouse count, specifically crafted and segregated for shipment to customer in five days per sales contract,
with return privilege. 18,000

If the recorded inventory in the balance sheet is P289,000, the year-end inventory will be overstated by:

2.The PRINCE COMPANY’S year-end inventory based on physical count conducted on December 31, 2016, amounted to P885,000.
Your cut-off examination disclosed the following information”:
1. Included in the physical count were goods billed to customer FOB shipping point on December 31, 2016. These goods had a cost
of P28,000 and were billed at P35,000. The shipment was on PRINCE’S loading dock waiting to be picked up by the common carrier.
2. Goods were in transit from a vendor to PRINCE on December 31, 2016. The invoice cost was P50,000 and the goods were shipped
FOB Shipping on Dec. 29,2016.
3. Work in process inventory costing P20,000 was sent to an outside processor for plating on Dec. 30, 2016.
4. Goods returned by customers and held pending inspection in the returned goods area on
Dec. 31, 2016, were not included in the physical count. On January 8, 2017, the goods costing P26,000 were inspected and returned to
inventory. Credit memos totaling P40,000 were issued.
5. Goods shipped to customer FOB destination on Dec. 26, 2016, were in transit at Dec. 31, 2016 and had a cost of P25,000. Upon
notification of receipt by the customer on January 2, 2017, the company issued a sales invoice for P42,000.
6. Goods received from a vendor on Dec. 26, 2016, were included in the physical count. However the related P60,000 vendor invoice
was not included in Accounts Payable as December 31, 2016, because the Accounts Payable copy of the receiving report was lost.
7. On January 3, 2017, a monthly freight bill in the amount of P4,000 was received. This was specifically related to merchandise
purchased in Dec. 31, 2016. The freight charges were not included in either the inventory or in accounts payable at Dec. 31, 2016.
1. Sales at year-end is overstated by:
2. Purchases at year-end is understated by:
3. Cost of sales at year-end is overstated by:
4. The inventory per audit at year-end is:

3.Marlisa Company’s December 31, 2015 and December 31, 2016 inventory is P35,000 and P27,000, respectively. The beginning and
ending inventories were determined by physical count of the goods on hand on those dates, and no reconciling items were
considered. All purchases are f.o.b. shipping point. In the course of your examination of the inventory cutoff, both the beginning
and ending of each year, you discover the following facts:

Beginning of the year

a. Invoices totaling P3,260 were entered in the voucher register on January, but the goods were received during December.
b. December invoices totaling P4,100 were entered in the voucher register in December, but the goods were not received until
January.

End of the Year

c. Invoices totaling P7,260 were entered in the voucher register in January but the goods were received in December.
d. December invoices totaling P3,600 were entered in the voucher register in December, but the goods were not received until
January.
e. Invoices totaling P1,500 were entered in the voucher register in January, and the goods were received in January, but the invoices
were dated December.
:
Based on your analysis and the information above, answer the following:
1. The adjusted balance of the Jan. 1, 2016 inventory is:
2. How much is the adjusted balance of the Purchases account at December 31, 2016
assuming the amount of Purchases in the trial balance is P5,176,000?
4. The corrected December 31, 2016 inventory is
You were assigned to audit the factory accounts of Modfood Manufacturing Corporation for the year ended December 31, 2016. The
following data were gathered:
Total manufacturing Cost P 900,000
Cost of Goods Manufactured 800,000
Factory Overhead 75% of direct labor and 25% of total manufacturing cost

Beginning work-in-process inventory, January 1, was 60% of ending work-in-process inventory, December 31, 2016.
Manufacturing costs for the year ended December 31, 2016 submitted to you by the factory accountant was as follows:
Raw Materials Used P400,000
Direct Labor 275,000
Factory Overhead 225,000
Total P900,000
How much is the Work-in-process Inventory on December 31, 2016?

5. At the beginning of the year, Anda Realty embarked on a real estate development project involving single family dwellings. On
July 1, 2018, Anda realty purchased a track of land for P60,000,000. Anda incurred additional cost of P10,000,000 during the
remainder of 2018 in preparing the land for sale as follows.
Subdivision
Phase Number of lots Sales price per lot
1 100 400,000
2 200 300,000
3 400 250,000
What amount of cost should be allocated Phase 1 lots?

6.Skyfall Co. records purchases at net amounts. On May 5 Skyfall purchased merchandise on account, P32,000, terms 2/10, n/30.
Skyfall returned P2,000 of the May 5 purchase and received credit on account. At May 31 the balance had not been paid. By how
much should the account payable be adjusted on May 31?

END