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Problem 1 Haya hay Company provided the following information from its accounting records for the year ended, December 31, 2017: Inventory at December 31, 2017 per physical count on this date P 980,000 Accounts Payable at December 31, 2017 586,000 Net Sales (Sales Return less sales return) 10,048,000 Additional Information follows: a. Good held on consignment amounting to P 9,000, were included in the physical count of goods and in Accounts Payable. b. Retailers were holding P 50,000, at cost, goods on consignment from Hayahay, at their stores at year end. 0. Included in the physical count were goods billed to a customer FOB shipping point on December 31, 2017. These goods had a cost of P 31,000 and were billed at P 40,000. The shipment was on Hayahay's loading dock waiting to be picked up by the common carrier. d. P 15,000 worth of goods were sold in the last week of 2017 and appropriately recorded as sales of P 21,000. The goods were included in the physical count on December 31,2017, because the goods were on the loading dock awaiting to be picked up by the customer. e. Goods were in transit from a vendor on December 31, 2017, The invoice cost was P 71,000 and were shipped FOB Shipping Point on December 29,2017. f. Work in process inventory costing P 30,000 was sent to an outside processor for plating on December 30, 2017. g. Goods returned from a customer and held pending inspection in the returned goods area on December 31, 2017, were not included in the physical count. On January 8, 2018, the tools costing P 32,000 were inspected and returned to inventory and credit memo amounting to P 47,000 were issued to customer on the same date. h. Goods shipped to a customer FOB destination on December 26, 2017, were in transit at December 31, 2017, and had a cost of P 21,000. Upon notification of receipt by the customer on January 2, 2018, Hayahay issued an invoice for P 42,000. 7 V J l_ i. Goods with an invoice Oct of P 27,000 were recorded in the receiving report dated January 2, 2018. The goods were not included in the physical count, but it was included in the Accounts Payable at December 31,2017. j. Goods received from a vendor on December 26, 2017, were included in the physical count. However, the related P 56,000 vendor invoice was not included in the accounts payable at December 31, 2017, because the accounts payable copy of the receiving report was lost. k. On January 3, 2018, a monthly freight bill in the amount of P 6,000 was received. The bill specifically related to merchandise purchased in December 31, 2017, one half of which is still in the inventory at year end. This bill was not yet recorded in either inventory and accounts payable. Based on the above information, answer the following: 1. The adjusted inventory as of December 31, 2017 is a. P 1,158,000 b. P 1,119,000 0. P 1,190,000 d. P 1,150,000 2. The adjusted accounts payable as of December 31, 2017 is 2. The adjusted accounts payable as of December 31, 2017 is a. P 710,000 b.P 639,000 C. P 719,000 d. P 633,000 3. The adjusted net sales as of December 31, 2017 is a. P 10,008,000 b. P 10,001,000 C. P 9,919,000 d. P 9,961,000 4. The total amount that was deducted from the unadjusted inventory based on the above audit findings is a. 9,000 b. P 15,000 C. P 24,000 d. P 54,000 5. The total amount that was added to the unadjusted inventory based on the above audit findings is a. P 151,000 b. P 183,000 C. P 234,000 d. P 204,000 Problem 2 You 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 SI 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 60,000 12.31 Closing Entry ( 1,500,000) 12.31 SI No. 1024 40,000 12.31 SI No. 1025 34,000 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 on 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 premises2. 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. 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. 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. 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 The correct amount of purchases for the year ended, December 31, 2017 is a. P 1,488,000 b. P 1,542,000 0. P 1,522,000 d. P 1,574,000 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 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 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 432,000