NAME : JULIE ANN G.

PILI
NOEL ANGELO RIVERA
In connection with your audit of the financial statements of MA-CPA KO
PUHON CORPORATION for the year ended December 31, 2014, you conducted a
surprise count of the companys petty cash fund and other cash which might be on
hand with the cashier, Ms. Julie Ann Pili, CPA, and your count disclosed the following:
Bills

Coins
100.00
50.00
20.00

Checks
Date
Dec 30
Dec 30

5 pieces
2 pieces
10 pieces

Payee

Dec 31

Cash
MA-CPA KO PUHON
CORP.
MA-CPA KO PUHON
CORP.
MA-CPA KO PUHON
CORP.
MA-CPA KO PUHON
CORP.
Taiwan Corp.

I.O.Us
Date
Nov 1
Nov. 2
Nov. 3

Maker
Richard Yap, Clerk
Percival, messenger
Leon Key, accountant

Dec 31
Dec 31
Dec 31

Unreplenished Vouchers
Date
Payee
Dec 23 Mario Lansang,
sales messenger
Dec 28 Central Post Office
Dec 29 Messengers
Dec 29 Byte Inc

10.00
5.00
0.25

Maker
Custodian
Benjamin Laden
Corp.
Benjamin Laden
Corp.
Benjamin Laden
Corp.
Ateneo, Inc.
Benjamin Laden
Corp.

50 pieces
15 pieces
32 pieces

Amoun
t
P 1,200
14,000
1,680
17,800
8,300
27,000

Amount
P 2,500
1,500
1000

Description
Advance for trip to
Tagaytay City
Postage Stamps
Transportation
Computer Repair

Amount
P 20,000
1,620
150
800

You also found that the petty cash fund amounted to 50,000.
Further investigation also disclosed that the cash sales on January 2, 2015
amounted to P55,000 as shown by the sales records while Cash Receipt Book and
Bank Deposit Slip showed that only 25,000 was deposited in the bank on January 4,

2015. You also found a pay envelope of Juan McDonut. The envelope was marked
Unclaimed and opened with the amount 20,000.
You also gathered the following information in conducting an audit of the cash
account of MA-CPA KO PUHON CORP. :
a. Balance per bank, December 1, 2014
b. Total bank receipts (credits) in December
c. Balance per bank, December 31, 2014
114,500
d. Outstanding checks, Nov. 30 2014
(including P12,000 paid by the in December)
e. Outstanding checks, December 31, 2014
(including checks issued in November)
f. Deposit in transit, November 30, 2014
g. A customers check received on December 4, 2014,
was returned by bank on December 7 marked
NSF. It was redeposited on December 8, 2014. The
Only entry made was to take up the collection on
December 4, 2014.

145,000
346,000

67,000
94, 162
39, 458

11,143

Youre are also provided by the following information from its accounting
records for the year ended December 31, 2014.
Inventory at December 31, 2014 (based on physical count)
Accounts Payable at December 31, 2014
Net sales
5,540,000

2,880,000
1,650,000

You obtained the additional information below:

a. Merchandise with a cost of P50,000 was included in the inventory count and
the related purchase was not recorded. The goods have been shipped by the
vendor F.O.B. Destination and only the invoice had been received during
2014.
b. Merchandise costing P100,500 was put on consignment to the CUTE KO
Company and was excluded in the final inventory. No sale was recorded.
c. Goods shipped to a customer F.O.B. Destination on December 26, 2014 were
in transit at December 31,2014 and had a cost of P70,000 and is excluded in
the count of final inventory. Issued a sales invoice for P55,000 as inspected
by the customer on January 2, 2015.
d. Received goods held on consignment from KAYA RA NI Company amounting
to P100,000. These were included in the physical count of goods and in
accounts payable at December 31, 2014.

e. Retailers have goods of P880,000 at cost (700,000 at retail) on consignment

from MA-CPA KO PUHON Company, the consignor, at their stores on
December 31,2014.
f.

Goods were in transit from a vendor. The goods were shipped F.O.B. Shipping
point on December 30, 2014, and the invoice was P75,000.

Also, your audit of accounts receivable and other related accounts disclosed the
following:
1. Accounts Receivable amounting to 500,000 as of December 31,
2014
2. An aging of the accounts receivable as of December 31, 2014
revealed the following:
Age
Net Debit
Amount to which the
Category
Balance
allowance is to be adjusted
after adjustments and
corrections have been made
Under 2
171,000
3%
mos.
2 to 3
83,000
4%
mos.
3 to 4
25,000
5%
mos.
Over 4
12,000
3,000 definitely uncollectible;
mos.
remainder is estimated to be
70% collectible
3. Doubtful Account Expense have the following entries:
a. A credit for 1,296 on Novemebr 1, 2014, and a debit to
allowance for Uncollectible Accounts because of bankruptcy.
P 1,296 write-off of receivables relates to 3-4 months day age
category
b. A debit on December 31 for the amount of the credit to
Allowance for Doubtful Accounts
4. The Allowance for Bad Debts account is presented below:
Balance
Beginning Balance- Jan 1, 2014
7,800
Write Off-Sept 1, 2014
Debit 1,380
6,420
Provision (7% of 500,000) Credit 35,000
41,420
5. There is a credit balance in account receivable (2 to 3 mos.) of
3,000 which represents and advance on sales contract

Furthermore, the accompanying analyses of the Property, Plant and

Equipment and related accumulated depreciation accounts have been by prepared
by the chief account of the client. The beginning balance is already provided based
on you prior audit working paper.

The following are methods of depreciation used for each type of asset by MA-CPA KO
PUHON CORP
Description
Date of
Useful life
Method
Beginning Balances
Purchase
COST
ACCUMULATED
Description
Land
Jan 1, 2009
DEP.
Building
March 31, 2011
6 years
Straight Line
Land
4,000,000
Equipment-A
July 1, 2010
8 years
Straight Line
Building
2,568,000
1, 177,000
Equipment-A
1,172,000
512,750
The
following
are transactions during 2014:
1. Purchased land and building on November 1, 2014 amounting to
10,000,000 with a cost of 400,000 and 600,000 respectively. The building
has estimated useful life of 10 years.
2. Equipment B with and invoice price of 315,000 with terms 5/10, n/30 was
purchased on March 1, 2014. Installation and testing cost amounting to
4,000 and 6,000 respectively was incurred. Equipment have a useful of 5
years and will be depreciated using the straight line method without
residual value.
3. On June 30, 2014, Equipment B was for 500,000
Requirement:
A. CASH
a. Prepare Cash Count Sheet and determine the cash shortage or overage
b. Compute the following:
1. Total book receipts in December
2. Total bank disbursement in December
3. Total book disbursement in December
B.

INVENTORY
a. Compute the adjusted balance of the following:
1. Inventory
2. Accounts Payable
3. Net Income

C. ACCOUNTS RECEIVABLE
A. Compute corrected balance of the following:
1. Accounts Receivable

2.

Allowance for Doubtful Accounts

D. PPE
A. Prepare an audited Lapsing Schedule of the PPE

ANSWER KEY
CASH
(A)
MA-CPA KO PUHON CORPORATION
Cash Count
Bills

100.oo
50.00 x
20.00 x

x
5 pieces
2 pieces
=
10 pieces
=

= P 500
100
200

10.00 x
5.00 x
0.25 x

50 pieces
15 pieces
32 pieces

500
75
8

800

Coins

Checks
Date
Dec 30
Dec 30
Dec 31
Dec 31
Dec 31
Dec 31

Payee
Cash
MA-CPA KO PUHON
CORP.
MA-CPA KO PUHON
CORP.
MA-CPA KO PUHON
CORP.
MA-CPA KO PUHON
CORP.
Taiwan Corp.

=
=
=

583

1,383

Maker
Custodian
Benjamin Laden
Corp.
Benjamin Laden
Corp.
Benjamin Laden
Corp.
Ateneo, Inc.

Amount
P 1,200
14,000

Benjamin Laden
Corp.

27,000

1,680
17,800
8,300
69,980

I.O.Us
Date
Maker
Amount
Nov 1
Richard Yap, Clerk
P 2,500
Nov. 2
Percival, messenger
1,500
Nov. 3
Leon Key, accountant
1000
Unreplenished Vouchers
Date
Payee
Description
Amount
Dec 23 Mario Lansang,
Advance for trip to
P 20,000
sales messenger
Tagaytay City
Dec 28 Central Post Office Postage Stamps
1,620
Dec 29 Messengers
Transportation
150
Dec 29 Byte Inc
Computer Repair
800
TOTAL CASH COUNT

CASHIERS ACCOUNTABILITY
Petty Cash Fund
Unclaimed Salary
Undeposited Sales
100,000
CASH SHORTAGE

5,000

22, 570
98,93
3

50,000
20,000
30,000
1,067

(B)
b1)
Bank receipts (credits) in December
Less: Deposit in transit, November 30
NSF check redeposited in December
Book receipts (debits) in December
b2)
Bank balance, December 1, 2014
Add: Bank receipts in December
Total
Less: Bank balance, December 31, 2014
Bank disbursement in December

346,000
39,458
11,143

50,601
295,399

145,000
346,000
491,000
114,500
376,500

b3)
Bank disbursements in December
Add: Book disbursement in December
but not in December bank disbursements:
Check issued in December, outstanding
at December 31:
Outstanding checks, Dec. 31
94,162

376,500

Less: Checks issued in Nov.,

Still outstanding at Dec. 31

55,000
39,162
Total
415,662
Less: Bank disbursements in December but
not in book disbursements in December
November outstanding checks
paid by bank in December
12,000
NSF Check
11,143
23, 143
Book disbursements (credits) in December
392,519
B.) INVENTORY
Inventory
Initial Amounts
Adjustments :
a.
b.
c.
d.
e.
f.
Net Adjustments
Adjusted balance

2, 880,000
(50,000)
100,500
70,000
(143,000)
880,000
9,000
866,500
A1) 3,746,500

Accounts
Payable
1,650,000

Net Sales
5,540,000

(143,000)
9,000
(134,000)
A2) 1,516,000

0
A3) 5,540,000

C.) ACCOUNTS RECEIVABLE

Under 2
months
2 to 3 months
3 to 4 months
Over 4
months

Unadjust
ed
200,000
150,000
100,000
50,000

Adjustment
s

P500,000

(4,080)

3,000
(1,296)
(3,000)

Adjusted

200,000
153,000
98,704
47,000

3%
4%
5%
30%

A1)
P450,920

Required
Allowance
6,000
6,120
4,935.2
14,100
P31,155.2

A2) Allowance for Doubtful Accounts:

Unadjusted Balance
41,420
Uncollectible over
4 mos.
(3,000)
ADA 12/31/14
38,420
Required AD
31,155.2
D.) PROPERTY, PLANT and EQUIPMENT
LAPSING SCHEDULE OF PPE
COST
LAND
BUILDING
Beginning
4,000,000
2,568,000

EQUIPMENT
1,172,000

Bal.
Additions
Disposals
Ending
Balance
ACC. DEP.
Beginning
Bal.
Provisions
Disposals
Ending Bal.
BOOK
VALUE
A. Land
Building

4,000,000 (A)
8,000,000

6,000,000 (A)
8,568,000

310,000 (C)
(310,000)
1,172,000

1,177,000

512,750

8,000,000

528,000 (B)
1,705,000
6,836,000

167,167 (D)
(20,667) (D)
659,250
512,750

400,000
4/10
600,000
6/10
1,000,000

B. 2012
Depreciation Expense- Old bldg.
(2,568,000/6yrs)
Depreciation Expense-New bldg.
(6,000,000/10yrs)x2/12

4,000,000
6,000,000
10,000,000
428,000

100,000
528,000
C. Purchase Price (net of discount)
300,000
Installation and testing cost
10,000
310,000
D. 2012
Depreciation Ex.- Old Equipment
(1,172,000/8yrs)
146,500
Depreciation Ex-New Equipment
(310,000/5yrs)x4/12
20,667
167,167