ERROR CORRECTION

MANNY Co. reported pretax incomes of P 4,545,000 and P 3,483,000 for the years 2010 and 2011, respectively.
Your audit however revealed the following errors:
a.
b.
c.

d.

Sales for 2010 included a P 1,719,000 collection pertaining to a delivery made in January of 2011 under
FOB Seller freight terms.
Inventory on December 31, 2010 was understated by P 388,800 while inventory on December 31, 2011 was
overstated by P 255,000.
Interest expenses on bonds for both years were recorded as payments were made every December 31. The
bonds have a face value of P 11,250,000 and pay a nominal interest rate of 6%. They were issued at a
discount of P675,000 on January 1, 2009 to yield an effective interest rate of 7%.
Ordinary repairs to equipment had been charged to the Equipment account during 2010 to 2011. Repairs of
P 382,500 and P 423,000 had been incurred in 2010 and 2011, respectively. In determining depreciation
charges, MANNY Co. uses the double declining balance method over a ten year useful life. The rate is
being applied to the balance of the asset account at the end of each year.

What is the adjusted pretax income for 2010 and 2011?

PETTY CASH FUND
UHAWSAIYO COMPANY
GENERAL AND PETTY CASH COUNT
AUDIT YEAR: 2014
DATE OF COUNT: January 5, 2015, 9:10 am
Bills and Coins
Denomination
P 500
100
50
20
10
5
1
.25

Bundles of 100
pcs.
1
2
3
5

Rolls of 50
coins

6
10
40

Loose
9
27
5
4
10
4
20
16

Checks
Maker
T. Otis customer
R. Eyes customer
O. Liever customer
F. Rancisco customer
Uhawsaiyo
M. Doza officer
O.Campo officer *

Payee
Uhawsaiyo
Uhawsaiyo
Uhawsaiyo
Uhawsaiyo
ABC. Co
Cash
Cash

Date
12/30/14
12/26/14
1/2/15
12/21/14
12/27/14
1/5/15
12/29/15

Amount
P 11,920
12,505
5,707
13,350
14,500
310
260

*Amount is for a return of travel advance mad to the employee in an earlier period.
Vouchers and IOU
Paid to
PNR transportation expense
Post ofiice- Postage Stamps
Italian Village Christmas Party

Date
1/2/15
12/20/14
12/23/14

Amount
P 35
150
6,290

I.Dio - IOU

12/27/14

300

Others:
1. Cash sales invoices ( all currencies No. 17903 to 18112), P 100,500
2. Official Receipts
Number
Amount
Form of Collection
31250
P
560
Cash
31251
12,505
Check
31252
1,202
Cash
31253
11,920
Check
31254
13,350
Check
3. Stamps of various denomination amounted to P 80.
4. A notation on a sheet of paper as follows:
Proceeds from employee contribution for Christmas Party, P 9,500
5. Petty Cash Ledger, P 15,000.
Required:
1. How much is the petty cash shortage as of January 5, 2015?
2. What is the net adjustment to the Petty Cash Fund?
3. What is the adjusted Petty Cash fund Balance as of December 31, 2014?