ACC412/313/314 INSTRUCTION: YOU HAVE 45 MINUTES ALLOTTED TIME OR THIS TEST. USE MS EXCEL AS SOLUTION SHEET. You are a member of the staff of the accounting firm of RDB & Co, CPA's and have completed the fieldwork relative to the audit of the financial statements of GIO Inc. for the fiscal year ended July 31, 2021. The following accounts were taken from your adjusted trial balance Debits Philtrust Bank, current account Interest expense Cost of sales Treasury shares (Cost of 50 shares) Advertising Cash Office salaries Land Depreciation - building Life insurance expense Petty cash Loss on sale of equipment Bad debts Store equipment Financial asset at fair value through profit or loss Trade receivables General administrative expenses Building Notes receivable Depreciation - store equipment Merchandise inventory Sales salaries Accrued interest receivable Stationery and office supplies Taxes and licenses Prepaid insurance Cash surrender value of life insurance TOTAL P129,430 4,200 3,052,000 5,000 15,790 31.750 249,200 130,000 25,600 7,200 1,500 31,600 33.224 148,000 78,000 313,200 44,480 520,000 53,200 14,000 755,720 324.800 1,800 4,200 45,000 3,680 141,600 P 6,169,174 Credits Accrued office salaries Allowance for doubtful accounts Sales Accummulated depreciation - store equipment Interest income Accumulated depreciation - building Commission income Retained earnings Trade payable Share capital (P100 par value per share, 12,000 shares P 8,000 36,624 3,662.400 47,600 4.400 136,000 21,800 670,270 243,600 1 authorized 20,000 shares) SSS premiums payable Liabilities under trust receipts TOTAL 1,200,000 12,120 126.360 P6.169. 174 Additional information: The company provides allowance for doubtful receivables equal to the estimated losses that will be incurred in the collection of the receivables. The estimated losses are based on a review of the current status of existing receivables. . As at July 31, 2021, the allowance for doubtful accounts amounted to P36,624. However, based on your examination of the accounts receivable as at that date, that an additional amount of P71,000 must be needed to cover possible losses in the collection of the receivables . Financial asset at fair value through profit or loss consists of marketable securities carried in the books at cost. The market value of these securities was P78612 at July 31, 2021 The merchandise inventory is stated at cost, determined on the first in, first-out method. However, this includes slow, non-moving and obsolescent items with an aggregate cost of approximately P400,000 and estimated net realizable value of P350,000. No allowance or provision for stock obsolescence was provided on these inventory items. Write down is charged to cost of sales. The land, building and store equipment are stated at cost. Depreciation is computed on the straight -line method based on the estimated useful lives of the assets As at July 31, 2021, the Company had authorized expenditures of approximately P700,000 for additions and improvements to its building . The BIR has assessed the Company for additional income taxes aggregating P34 Dod for the fiscal years ended July 31, 2018 and 2019. Protest has been filed and the assessments are being contested by the Company's legal counsel who is af opinion that there is no adequate legal basis authorized 20,000 shares) SSS premiums payable Liabilities under trust receipts TOTAL 1,200,000 12120 126,360 P 6,169,174 Additional information: The company provides allowance for doubtful receivables equal to the estimated losses that will be incurred in the collection of the receivables. The estimated losses are based on a review of the current status of existing receivables As at July 31, 2021, the allowance for doubtful accounts amounted to P36,624. However, based on your examination of the accounts receivable as at that date, that an additional amount of P71.000 must be needed to cover possible losses in the collection of the receivables. Financial asset at fair value through profit or loss consists of marketable secunties carried in the books at cost. The market value of these securities was P78,612 at July 31, 2021. The merchandise inventory is stated at cost, determined on the first-in, first-out method. However, this includes slow, non-moving and obsolescent items with an aggregate cost of approximately P400,000 and estimated net realizable value of P350,000 No allowance or provision for stock obsolescence was provided on these inventory items. Write-down is charged to cost of sales The land, building and store equipment are stated at cost. Depreciation is computed on the straight -line method based on the estimated useful lives of the assets. As at July 31, 2021, the Company had authorized expenditures of approximately P700,000 for additions and improvements to its building, The BIR has assessed the Company for additional income taxes aggregating P84,000 for the fiscal years ended July 31, 2018 and 2019. Protest has been filed and the assessments are being contested by the Company's legal counsel who is of opinion that there is no adequate legal basis for the additional assessments. Accordingly, no provision was made for the amount assessed. Under the terms of the agreements covering the Company's liabilities under trust receipts, certain merchandise have been released to the Company in trust for the bank. The Company is accountable to the bank for the trusteed merchandise or its sales proceeds. Required: A Compute for the corrected balances of the following accounts: (1) Beegegaase Petty Cash Cash on hand and in bank Financial asset at fair value through profit or loss Trade receivables Allowance for Doubtful accounts Notes receivable Accrued interest receivable Merchandise inventory Prepaid Insurance Stationery and office supplies Cash surrender value of life insurance Land (12) (13) ( (14) (15) () (16) (17) (18) (19) (20) (21) (22) (23) (24) (25) (26) (27) (28) (29) ) (30) (31) (32) (33) (34) (35) (36) (37) (38) (39) Building Accumulated depreciation building Store equipment Accumulated depreciation - store equipment Accounts payable Accrued office salaries SSS premiurns payable Liabilities under trust receipts Share capital Retained earnings Treasury Shares Sales Cost of sales Sales salaries Office salaries General administrative expenses Bad debts Taxes and licenses Depreciation - building Depreciation - store equipment Life insurance expense Advertising Gain on FVPL securities Commission income Interest income Loss on sale of equipment Interest expense .. As at July 31, 2021, the allowance for doubtful accounts amounted to P36,624. However, based on your exain:00 che accounts receivable as at that date, thn an idirnal amount of t3500 must be needed to cover possible losses in the collection of the receivables !!! Financial asset at fair value through profit or loss consists of marketable securities carried in the books at cost. The market value of these securities was P78,612 at July 31, 2021. . The merchandise inventory is stated at cost determined on the first-in, first-out method. However, this includes slow, non-moving and obsolescent items with an aggregate cost of approximately P400,000 and estimated net realizable value of P350,000. No allowance or provision for stock obsolescence was provided on these inventory items. Write down is charged to cost of sales. The land, building and store equipment are stated at cost. Depreciation is computed on the straight line method based on the estimated useful lives of the assets. . . As at July 31, 2021, the Company had authonzed expenditures of approximately P700,000 for additions and improvements to its building. . The BIR has assessed the Company for additional income taxes aggregating PB4,000 for the fiscal years ended July 31, 2018 and 2019. Protest has been filed and the assessments are being contested by the Company's legal counsel who is of opinion that there is no adequate legal basis for the additional assessments Accordingly, no provision was made for the amount assessed Under the terms of the agreements covering the Company's liabilities under trust receipts, certain merchandise have been released to the Company in trust for the bank. The Company is accountable to the bank for the trusteed merchandise or its sales proceeds. Required: ES A. Compute for the corrected balances of the following accounts: (1) Petty Cash Cash on hand and in bank Financial asset at fair value through profit or loss Trade receivables Allowance for Doubtful accounts (6) Notes receivable (7) Accrued interest receivable Merchandise inventory (9) Prepaid insurance (10) Stationery and office supplies Cash surrender value of life insurance (12) Land (13) (14) (15) (16) ) (17) (18) (19) (20) (21) (22) (23) (24) () (25) (26) (27) (28) (29) (30) (31) ( (32) (33) (34) (35) (36) (37) (38) (39) Building Accumulated depreciation - building Store equipment Accumulated depreciation - store equipment Accounts payable Accrued office salaries SSS premiums payable Liabilities under trust receipts Share capital Retained eamings Treasury Shares Sales Cost of sales Sales salaries Office salaries General administrative expenses Bad debts Taxes and licenses Depreciation - building Depreciation - store equipment Life insurance expense Advertising Gain on FVPL securities Commission income Interest income Loss on sale of equipment Interest expense B. Prepare Statement of Financial Position as at July 31, 2021. Prepare income statement for the fiscal year ended July 31, 2021 C END OF EXAM