Professional Documents
Culture Documents
BA 123
120,000
500,000
50,000
400,000
20,000
64,000
50,000
balances
170,000
360,000
80,000
100,000
200,000
1,000,000
2,000,000
90,000
390,000
160,000
120,000
360,000
120,000
210,000
80,000
500,000
200,000
BA 123
Entry Date
12.18.03
Voucher
Ref.
12-202
2
3
12.18.03
12.21.03
12-204
12-206
12.21.03
12-214
12.21.03
12-219
12.26.03
12-221
7
8
12.28.03
12.28.03
12-230
12-234
12.28.03
12-243
10
01.02.04
01-001
11
01.02.04
01-002
12
01.05.04
01-003
13
01.10.04
01-004
14
01.10.04
01-005
15
16
01.12.04
01.12.04
01-006
01-007
17
01.13.04
01-008
18
01.14.04
01-009
19
01.15.04
01-010
20
01.15.04
01-011
Description
Supplies, purchased FOB destination,
12.15.03; received, 12.17.03
Auto insurance, 12.15.03 to 12.15.04
Repair services; received 12.20.03
Merchandise shipped FOB shipping point,
11.20.03; received, 12.4.03
Payroll, 12.6.03 to 12.20.03
(12 working days)
Subscription to tax reporting service for
2004
Utilities for December 2003
Merchandise shipped FOB destination,
12.24.03; received, 1.2.04
Merchandise shipped FOB destination,
12.26.03; received, 1.3.04
Legal services, received 12.28.03
Medical services for employees for
December 2003
Merchandise shipped FOB shipping point,
12.29.03; received, 1.4.04
Payroll, 12.21.03 to 01.05.04
(12 working days in total,
4 working days in January)
Merchandise shipped FOB shipping point,
1.2.04; received, 1.5.04
Manufacturing royalties, Dec. 2003
Merchandise shipped FOB destination,
1.3.04; received, 1.10.04
Maintenance services, received 1.9.04
Interest on bank loan,
10.12.03 to 1.10.04
Manufacturing equipment, installed on
12.29.03
Dividends declared, 12.15.03
Amount
20,000
24,000
24,000
Supplies on hand
Prepaid insurance
Repairs and
maintenance
17,000
Inventory
69,000
5,000
29,000
111,500
Inventory
84,000
46,000
Inventory
Legal and professional
expense
25,000
Medical expense
55,000
Inventory
72,000
64,000
39,000
Inventory
Manufacturing costs
38,000
9,000
Inventory
Repairs and
maintenance
30,000
254,000
160,000
Account Charged
48,000
26,667
160,000
39,000
Interest expense
Machinery and
equipment
Dividends payable
BA 123
The Accrued payroll, Accrued interest payable, and Accrued royalties payable accounts were reversed on January
1, 2004.
REQUIRED:
Prepare adjusting entries as of December 31, 2003 based on your review of the data given above.
2.
3.
4.
5.
6.
7.
8.
Cut-off procedures revealed that a Php50,000 advertising bill was received last January 10, 2011,
comprising costs of Php37,500 for advertisements in December 2010 and Php12,500 for January 2011. No
accrual was posted as of December 31, 2010.
A store lease, effective January 1, 2010, calls for fixed rent of Php120,000 per month, payable one month
from the effective date and monthly thereafter. In addition, rent equal to 5% of net sales over
Php6,000,000 per calendar year is payable every January 31 of the following year. Sales for the year
amounted to Php7,500,000. no accrual was made at year end
Jolina has a bonus agreement with the company under which she receives 10% of audited net income
after bonuses each year. Since net income is yet to be determined, the bonus has not been provided for.
The company sold 70,000 units of sheet music. Each sheet music comes with a coupon, which if submitted
with Php50, entitles the customer to a free mixed song CD. Jolina pays Php70 for the CDs. Jolina estimates
that 70% of the coupons will be redeemed. Actual redemption amounted to 300,000 coupons for the
year. The accountant expensed CDs given out as redeemed. For the year, Jolina bought 450,000 mixed
song CDs.
Musical products are sold with a one-year warranty for replacement parts and labor. The estimated
warranty cost is 10% of musical product sales which comprise 40% of total sales. Like coupons, warranty
expense of Php64,000 was recorded as replacement parts are requisitioned and as job time tickets of
personel are submitted. Sales is for P 7.5 Million.
The accounts payable ledger included debits amounting to Php240,000 representing overpayment to a
supplier.
The unpaid voucher files were examined. The following payables and amounts were traced from the
accounts payable GL to the unpaid vouchers:
a) A Company Php224,000 merchandise shipper on December 31, 2010, FOB destination. The
inventory was received on January 10,2011.
b) B Company Php192,000; merchandise shipped on December 26,2010, FOB shipping point,
received on January 16, 2011.
c) C Super Services Php144,000; for janitorial services over a three month period ending January
31, 2011.
d) Meralco Php67,200; for electric bills covering the period December 15 to January 15, 2011.
Unaudited net income, and current liabilities amounted to Php1,000,000 and Php5,350,000 respectively.
Requirements:
1. Proposed audit adjustments from the foregoing data.
2. Audited net income.
3. Schedule indicating adjustments for audited liabilities.