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4. C Distribution costs:
Sales salaries and commissions (P75,000 + [P9,180 x 3%]) P75,275
Advertising expense (P48,270 + [P5,454 x 2/6]) 50,088
Depreciation expense – Sales/delivery equipment (P18,300 + [P23,400 x 10% x 10/12]) 20,250
Freight expense 10,500
Travel expense – sales representatives 13,680
Miscellaneous selling expenses 8,220
Total P178,013
5. B Administrative expenses:
Legal services P 6,675
Insurance and licenses 23,040
Depreciation expense – office equipment 12,600
Utilities 19,200
Telephone and postage 4,425
Office supplies expense (P6,540 – P3,675) 2,865
Officers’ salaries 109,800
Doubtful accounts expense (P783,000 x 2% = P15,660 – P480) 15,180
Total P193,785
AJES
1. Sales 360,100
Accounts receivable (P294,500 / 95%) 310,000
Sales discounts (P310,000 x 5%) 15,500
Cash 654,600
2. Cash (P372,400 – P12,400) 360,000
Purchase discounts 12,400
Accounts payable 372,400
3. a Accounts payable 175,000
Purchases 175,000
b Inventory 130,000
Cost of sales 130,000
c Cost of sales 637,500
Inventory 637,500
d Purchases 217,500
Accounts payable 217,500
Inventory 217,500
Cost of sales 217,500
e Inventory 275,000
Cost of sales 275,000
f No adjusting entry
Page 2 of 15 Pages
AUDITING PROBLEMS
LABADA CO.
Page 3 of 15 Pages
AUDITING PROBLEMS
PROBLEM 6
Compensation Cumulative
Expense Compensation
Year Calculation for Period Expense
1 30,000 options x P5 fair value x 1⁄3 P 50,000 P 50,000
2 30,000 options x P5 fair value x 1⁄3 50,000 100,000
3 30,000 options x P5 fair value x 1⁄3 50,000 150,000
CONDESSA CO.
Page 4 of 15 Pages
AUDITING PROBLEMS
3. Land 900,000
Treasury shares (P40 x 21,000) 840,000
Share premium – treasury 60,000
BARTOLO COMPANY
49. C 50. D
51. C Containers held by customers at Dec. 31, 2014 from deliveries in 2013 P85,000
Containers returned in 2015 from deliveries in 2013 (57,500)
Revenue from container sales P27,500
Page 6 of 15 Pages
AUDITING PROBLEMS
59. B
Date of
Acquisition Cost 2011 2012 2013 2014 2015 Total
1/1/11 P157,200 P31,440 P31,440 P15,720 P0 P0 P 78,600
120,000 24,000 24,000 24,000 24,000 18,000 114,000
132,000 26,400 26,400 26,400 0 0 79,200
9/30/11 186,000 9,300 37,200 37,200 37,200 37,200 158,100
6/30/12 235,200 0 23,520 47,040 47,040 47,040 164,640
6/30/13 279,000 0 0 27,900 55,800 55,800 139,500
Correct depreciation P91,140 P142,560 P178,260 P164,040 P158,040 P734,040
Depreciation per client 97,440 154,752 153,802 108,791 82,233 597,018
Over (under)statement P 6,300 P 12,192 (P 24,458) (P 55,249) (P 75,807) (P 137,022)
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Page 7 of 15 Pages
AUDITING PROBLEMS
Page 8 of 15 Pages
AUDITING PROBLEMS
Required
Per Books Adjustments Per Audit % Allowance
Less than 3 months P2,500,960 P146,940
107,400 P2,755,300 1 P27,553
3 to 6 months 843,200 843,200 5 42,160
Over 6 months 274,500 63,000
(152,460) 185,040 10 18,504
P3,618,660 P3,783,540 P88,217
2. D Cash in bank
Per books P1,056,000
AJE 2 (811,150)
Per audit P 244,850
3. D Trading securities
Per books P483,640
AJE 4 (10,940)
Per audit P472,700
4. C Accounts receivable
Per books P3,618,660
AJE 2 170,400
3 (152,460)
10 146,940
Per audit P3,783,540
Page 9 of 15 Pages
AUDITING PROBLEMS
7. A Inventories
Per books P7,274,900
AJE 11 (356,000)
12 (138,500)
13 153,800
Per audit P6,934,200
8. B Prepaid insurance
Per books P490,000
AJE 8 (81,667)
Per audit P408,333
9. A Prepaid rent
Per books P420,000
AJE 7 (280,000)
Per audit P140,000
18. C Sales
Per books P13,078,000
AJE 10 146,940
Per audit P13,224,940
Inventory 72,000
Cost of sales 72,000
(P90,000 x 80%)
24. A Correctly stated because the goods are considered sold in 2015.
Page 11 of 15 Pages
AUDITING PROBLEMS
Page 12 of 15 Pages
AUDITING PROBLEMS
40. B
51. C Year 1
Depletion Depreciation
Mineral property (P323 x 7,500) P2,422,500
Building (P80 x 7,500) P600,000
Machinery (1/2) (P12 x 7,500) 90,000
Machinery (1/2) (P24 x 7,500) 180,000
P2,422,500 P870,000
52. D Year 5
Depletion Depreciation
Mineral property (P323 x 15,000) P4,845,000
Building (P80 x 15,000) P1,200,000
Machinery (1/2) (P12 x 15,000) 180,000
Machinery (1/2) (P24 x 15,000) 360,000
P4,845,000 P1,740,000
53. C Year 6
Depletion Depreciation
Mineral property (P323 x 15,000) P4,845,000
Building (P80 x 15,000) P1,200,000
Machinery (1/2) (P12 x 15,000) 180,000
Machinery (1/2) (P24 x 7,500) 180,000
P4,845,000 P1,560,000
54. C Year 7
Depletion Depreciation
Mineral property (P323 x 15,000) P4,845,000
Building (P80 x 15,000) P1,200,000
Machinery (1/2) (P12 x 15,000) 180,000
Machinery (1/2) --
P4,845,000 P1,380,000
55. D Year 11
Depletion Depreciation
Mineral property (P323 x 7,500) P2,422,500
Building (P80 x 7,500) P600,000
Machinery (1/2) (P12 x 7,500) 90,000
Machinery (1/2) ---
P2,422,500 P690,000
Page 14 of 15 Pages
AUDITING PROBLEMS
---END---
Page 15 of 15 Pages