Accounting of Inventories for merchandising entity:

Problem 2 u were engaged by Snooky Corp. whose main warehouse is in Lipa City, for the audit of its financial statements ending December 31, 2017. The company is in the wholesale business and makes a mark-up of 20% based on sales in all their sales. The following are the unadjusted balances of their accounts related to its inventory in its trial balance. Accounts Receivable P 520,000 Inventory 630,000 Accounts Payable 410,000 PURCHASES SALES DATE REFERENCE AMOUNT DATE REFERENCE AMOUNT Balance Forwarded 1,400,000 Balance Forwarded 2,600,000 12.28 RR No. 1114 12,000 12.27 SI No. 1020 20,000 12.30 RR No. 1116 35,000 12.28 51 No. 1021 75,000 12.31 RR No. 1117 21,000 12.28 SI No. 1022 5,000 12.31 RR NO. 1118 32,000 12.31 SI No. 1023 50,000 12.31 Closing Entry 1,500,000) |12.31 SI No. 1024 40,000 12.31 SI No. 1025 $4,000 12.31 SI No. 1026 8,000 12.31 Closing Entry (2,832,000) You observed the physical inventory of goods in the warehouse on December 31, 2017, and were satisfied that it was properly taken. When performing sales and purchases cut-off test, you found that at December 31, the last Receiving Report (RR) that had been used ( for goods physically received as of december 31) was No. 1117 and that no shipment has been made ony Sales Invoice (SI) beyond no. 1024. You also obtained the following additional information: a. Not included in the warehouse physical inventory at December 31 were goods which had been purchased and received on RR No. 1115 but were physically segregated awaiting the receipt of the invoice, which was not received until the following year. Cost was P 20,000. b. On the evening of December 31, there were two trucks in the company's warehouse . Goods inside the trucks were not included in the physical count as of December 31: 1. Truck No. APC 321 was unloaded on January 2 of the following year and received on RR. No. 1117. The goods were shipped FOB Destination. 2. Truck No. ULI 341 was loaded and sealed on December 31 but left the company premises only on January 2. This order was sold per Sales Invoice No. 1024. The goods were shipped FOB Shipping Point. c. Sales Invoice no. 1021 pertains to a shipment which was temporarily stranded at December 31 enroute to a client's customer. The client's customer received the goods which were shipped FOB Lipa d. Enroute to the client on December 31 was a truckload of goods from supplier in Batangas were received on RR No. 1119. The goods were shipped FOB Batangas, and freight of P 2,000 was prepaid by the said supplier. Invocie price excluding freight amounted to P 54,000.1. The correct amount of sales for the year ended, December 31, 2017 is a. P 2,750,000 b. P 2,742,000 C. P 2,675,000 d. P 2,667,000 2. The correct amount of purchases for the year ended, December 31, 2017 is a. P 1.488,000 b. P 1,542,000 c. P 1,522,000 d. P 1,574,000 3. The correct inventory balance as of December 31, 2017 is a. P 737,000 b. P 739,000 c. P 757,000 d. P 759,000 4. The correct Accounts Receivable balance as of December 31, 2017 is a. P 446,000 b. P 478,000 C. P 363,000 d. P 438,000 5. The correct Accounts Payable balance as of December 31, 2017 is a. P 454,000 b. P 434,000 c. P 452,000 d. P 432,000Problem 3 On April 21, 2017, a fire damaged the office and the warehouse of Tanauan Corporation. The only accounting record saved was the general ledger, from which trial balance as of March 31, 2017 below was prepared. DEBIT CREDIT Cash 180,000 Accounts Receivable 400,000 Inventory, December 31, 2016 750,000 Land 350,000 Building 1,100,000 Accumulated Depreciation 413,000 Other Assets 56,000 Accounts Payable 237,000 Accrued Expenses 180,000 Ordinary Share Capital, P 100 par 1,000.000 Retained Earnings 520,000 Sales 1,350,000 Purchases 520,000 Operating Expenses 344,000 Total 3,700,000 3,700.000 The following data and information have been gathered: a. The company's reporting period is calendar period ending December 31 b. An examination of April bank statement and cancelled checks revealed that checks written during the April 1 to 21 totaled P 130,000; P 57,000 paid to Accounts Payable as of March 31; P 34,000 for April merchandise purchases; and P 39,000 paid to other expenses. Deposits during the same period amounted to P 129,500, which consisted of receipts on account from customers with the exception of P 9,500 refund from a vendor for merchandise returned in April. C. Correspondence with suppliers revealed unrecorded obligations at April 21 of P106,000 for April merchandise purchases, including P 23,000 for shipments in transit on that date. d. Customers acknowledged indebtedness of P360,000 at April 21, 2017. It was also estimated that customers owed another P80,000 that will never be acknowledged or recovered. Of the acknowledged indebtedness, P 6,000 will probably be uncollectible. e. The insurance company agreed that the fire loss claim should be based on the assumption that the overall gross profit ratio for the past two years was in effect during the current year. The company's audited financial statements disclosed the following information: 2016 2015 Net Sales 5,300,000 3,900,000 Net Purchases 2,800,000 2,350,000 Beginning Inventory 500,000 660,000 Ending Inventory 750,000 500,000 f. Inventory with the cost of P 70,000 was salvaged and sold for P 35,000. The balance of inventory was a total loss.1. Sales for the period January 1 to April 21, 2017 is a. P 1,430,000 b. P 1,510,000 c. P 1,519,500 d. P 1,506,000 2. Net purchases for the period January 1 to April 21, 2017 is a. P 683.000 b. P 660,000 C. P 673.500 d. P 650,500 3. Cost of Sales for the period January 1 to April 21, 2017 is a. P 786,500 b. P 835,725 c. P 830,500 d. P 828,300 4. Estimated Inventory on April 21, 2017 is a.P. 579,500 b. P 623,500 c. P 587.775 d. P 570,000 5. Estimated Inventory fire loss is a. P 579,500 b. P 535,000 C. P 477,000 d. P 512,000