aie so ’ | (CPA REVIEW SCHOOL OF THE PHILIPPINES Manila AUDITING PROBLEMS APRIL 22, 2017 FINAL PREBOARD EXAMINATION =~ SATURDAY, ca SeTA INSTRUCTIONS: CHOOSE THE BEST ANSWER FOR EACH OF THE FOLLOWING. FULLY ONLY ONE BOX FOR EACH ITEM, STRICTLY NO ERASURES ALLOWED. PROBLEM NO. 1 The following independent situations relate to the audit of cash. | ‘Myla Limpot is the cashier of the BUSTOS GLASS COMPANY. As representative of ARF & Co., CPAs, you were assigned to verify her cash on hand in the morning of January 4, 2018. You began to count at 9:00am in the presence of Miss Limpot. In the course of your counting you feed cro popes 3 cons peer Wh coe ee Se er are listed below: ar us ae 25 hundreds; 130 fifties; 142 twenties. «1 01 roll and 10 loose (20 pleces to a roll) - 5 4 rolls (50 pieces to a roll) 12 rolls and 29 loose (50 pleces to a rol) Checks Maker Date 1 Josue Crisanto, Asst. Manager 12/22/17 Ae Myla Limpot, Cashier 12/27/17 Sa Tous z ‘A. Davide, Janitor 12/19/17 700 R. Tirador 12/24/17 500 Peter Mulach, Bookkeeper 12/23/17 300 4 Petty Cash Vouchers for Replenishment Paves ‘Account. Charoed ‘Amount Lando Bilooa, Messenger 12/15/17 Advances to employees = P200 * Rosemary Company 12/16/17 Supplies 290 ‘Speed Liner 12/17/17 —_‘Freight-in 365 s PHL Posts (stamps) wnt? Supiies 600 tt 3 ‘A. Bellas, Carpenter 12/19/17 Repairs 300 B. Tallos 12/20/17 ‘Miscellaneous expenses 308 ie ‘Your investigation also disclosed the following: 1. The balance of petty cash fund per books is P18,000. > -- *) 2. Cash sales of January 2, 2018, amounted to P17,300 per sales records, while the Cash Receipts book and deposit slips se seed that oy Ps nos eat Wa en Sonam 3, 2018 3. The following employees’ pay’ ras and the money removed. Each cerwvelope was market sree Nee 1 The cn rae (Sean) fan. A P1A32 C. (P1,728)(CPA REVIEW SCHOOL OF THE PHILIPPINES (CPA) - MANILA FINAL PREBOARD EXAMINATION ‘AUDITING PROBLEMS. NES (CPAR) * MANIA _apRlk 22.2017 / SATURDAY /2:208M = 12:200% You are examining the records of ORLANDO COMPANY where internal control is found to be Mee part of your work includes reconcliation of cash for December 2017. vou have determined that the cllent’s cash reconciliation as of November 30, 2017, 1s correct “The following information 's available to you: Cent's Reconcitation, November 30, 2017 Cash per general ledger 7526348 Less: Cash on hand "42.178 484,170 Less: Bank service charge for November 1.800 482,370 Add: Outstanding checks 198200 © Balance per bank peg0.570 f Cash receipts are summarized weekly. ‘The cash receipts book for December Is shown below: Vx PP Dec. 1 Balance from November 30 526,348 8 Received on accounts 5,154,960 ey 15, Received on accounts 5,489,512 és 22. Received on accounts ‘931,964 - 29. Received on accounts —1122,320 exznsn.isd - **P ‘The cash payments record for December shows the following detells: Dec. 1 November service charge P 1,800 w 3° Checks: 1,047,300 5 Checks 729,042 8 Checks 3,278,978 10 Checks 3,174,684 12 Checks 969,778 19 Checks 724,566 aw 22 Checks 738,418 \ 31 Ge 1,531,540. ron 31. Balance __ “3622248” yy 4 Puasoisd 0 POLY Cash on hend on December 31 amounted te P20,000. The transactions per the December bank aaeoeat, winch are correct cezorded -the bank, show that deposits amounted J P12,574,184, checks paio amounted to 11,580,406; ‘charge for the month was P2,000;, Seaporge of P20,000 wes made against the account because of the return unpaid of 2istomer’s check. The service charge and the returned check were not ‘on the client's books, The total of outstanding checks as of December 31 was found to be 100. > he-cash shortage as of December 31 1s AL P218,200 B. PO C. 201,800 So, P221,800 (> Carne adjusted Book balance on December 31 's DY A. 1,283,048 B. PS24,548 C. P1,062,048 yD, PRAO,24B \s the adjusted book balance an Nevembar 30 Is ». Sf ee Bo |B. 524,548 yf — C. P1,062,048 D. P840,248 {> adjusega bank, \phs and disbursements for December are | 7 feceiots Disbursements 2 \ 112,552,006 +f 12,236,306 GS % \ = 12,216,306 ="Ju 12,214,306 11,590,406 Page 2 of 10 Pages‘CPA REVIEW SCHOOL OF THE. PHILIPPINES (CPAR) - MANILA FINAL PREBOARD EXAMINATION ‘AUDITING PROBLEMS APRIL 22, 2017 SATURDAY / 9:30AM = 12:30 PROBLEM NO. 2 The NIMO COMPANY’s December 31, 2016, statement of financial position Is presented below: ASSETS ae 1,620,000 Prepaid rent ee Machine y Accumulated depreciation i LIABILITIES and EQUITY Accounts payable 4 1,200,000 Ordinary shares, P10 par 4 \y 900,000 Share premium 1,545,000 Retained earnings 600,000 ‘P4,245,000 During 2017, the following transactions occurred: 1. To.avold paying monthly rent of P15,000 on existing plant facilities, the company decided to buy a tract of land and construct a building of its own on it. On January 2, 2017, Nimo exchanged 21,000 shares of ts ordinary shares to acquire the land; the share was selling for P25 per share. Construction of the building also began on January 2, 2017. At the time, Nimo borrowed funds by issuing a one-year, P1,500,000 note at 12% to help finance the Project. The company, however, used part of the loan proceeds to meet its working capital Fequirements. The principal and interest on the note are due January 2, 2018. Construction” costs (paid in cash) that occurred evenly throughout the year totaled P2,100,000. | The ~ building was completed on December 30, 2017, and the move-in to the new balling was to ‘occur during the next week, “ “R 2. On January 2, 2617, Nimo exchanged its one existing machine plus P180,000 cash for a ®. newer, similar machine with a fait value of P1,290,000. The exchange was with another company in the same Industry. The new machine Is to be depreciated using straight ine depreciation based on an economic life of 5 years and a residual value of 165,000. 3. Nimo uses a FIFO perpetual inventory system. Nimo sold P1,050,000 of its inventory for 2,400,000 cash, paid for its beginning accounts payable, and purchased) P1,440,000 of inventory on account during the year. \ 4. On July 31, 2037, Nimo declared and paid @ P2.50 per share cash dividend to its shareholders. 5. Nimo Is subject to a 30% income tax rate, and income taxes are accrued at year-end. Based on the preceding information, determine the adjusted balances of the following at December 31, 2017: A (By Niet Income forthe year ended December 31, 2017. * A. P534,200 B. P623,700 C. P672,000 D. P661,500 5+ AO Retained earings A. P946,200 B. P956,700 C_P994,500 D. P984,000 A> Total assets é se By P7,596,000 B. P7,498,500 C. P7,138,500 D. P7,318,500 eon liabilities ‘A, P3,991,600 B. 3,811,800 C_P2,791,800 D. P3,571,800 4,941,000 C. 3,870,000 $ —_D. 3,546,000 neni ---600000000~ Page 3 of 10 Pages