You are on page 1of 2

Punongbayan & Araullos Auditing Problems Quiz 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 Add deposit in transit Less outstanding checks Balance per books, March 31 Data per bank statement for the month of April follow: Deposits Disbursements

P P P P P

93,000 20,600 113,600 25,200 88,400 116,800 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 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 P11,000. It

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 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

5.

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 Information pertaining to Trace Company for the month of August appears below: Balance per bank statement P 310,000

7.

Balance per books Deposit in transit Service charges Note collected by bank Outstanding checks

187,500 70,000 2,500 75,000 ?

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. b. The management wrote a check for traveling expenses of P25,000 while out of town. The check was not recorded. What is the amount of outstanding checks on August 31, 2006? a.P150,000 b.P140,000 c.P125,000 d.P230,000

8.

The inventory on hand on December 31, 2006 of LEISA CORP. is valued at a cost of P300,000. The following items were not included in the inventory: a. Purchased goods in transit shipped FOB Destination, with price of P30,000 which included freight charge of P5,000. b. Goods held on consignment by LEISA CORP. at a sales price of P10,000, excluding a 20% commission on the sales price. Freight paid by LEISA CORP. was P1,000. c. Goods sold in transit FOB Destination with invoice price of P49,000 which included freight charge of P4,000 to deliver the goods. d. Purchased goods in transit FOB Shipping Point with invoice price of P60,000. Freight costs amount to P6,000. Goods out on consignment with sales price of P30,000. Shipping costs amounts to P3,000. What is the correct inventory on December 31, 2006 assuming LEISAs selling price is 150% of costs? a.P419,000 b.P416,000 c.P410,000 d.P 17,500 In analyzing the shareholders equity section of the PEARSON CORP. The following information was abstracted from the accounts at December 31, 2007: Total income since incorporation P 7,875,000 Total cash dividends paid 2,437,500 Proceeds from sale of donated stock 843,750 Total value of stock dividends distributed 562,500 Excess of proceeds over cost of treasury stock sold 131,250 What should be the balance of the Retained earnings account as of December 31, 2007? a.P 4,875,000 b. P 6,218,750 c. P 7,031,250 d. P 10,031,250

9.

10.

Still Trading made investments in available for sale securities. The Unrealized gain or loss account has a debit balance of P38,700 at December 31, 2006. An analysis of the investment account on December 31, 2006 showed the following: No. of shares Cost Market A common 600 shares P922,500 P810,000 B common 225 shares 229,500 270,000 C common 2,000 shares 808,500 841,800 On July 01, 2007, the shares of B common were sold for P210,000. On December 31, 2007, A shares were quoted at P1,320 per share and C common shares were quoted at P414 per share. How much is the required increase in the Unrealized gain or loss account at the end of 2007? a.P130,500 b.P111,000 c.P 91,800 d.P 31,800

You might also like