Auditing and Assurance
Case 1 Presented below are unrelated situations. Answer the questions related to each situation. The following information is from Gen Corporation's rst year of operations: Merchandise purchased P675,000 Ending merchandise inventory 185,000 Collections from customers 225,000 1. All sales are on account and goods sell at 30% above cost. What are the accounts receivable balance at the end of the first year of operations? Killua Co. reported the following information at the end of its first year of operations, December 31 , 201 A: Doubtful accounts expense for 201 A P406 ,500 Uncollectible accounts written off during 201A 70,800 Net realizable value of accounts receivable 1,342,500 2. What are the accounts receivable balance on December 31, 201 A? Kurapika, Inc. sells a variety of imported goods. By selling on credit, Kurapika cannot expect to collect 100% of its acc0unts receivable. At December 31, 201 A, Kurapika reported the following in its statement of financial position. Accounts receivable P2,637,000 Less: Allowance for doubtful accounts 160,200 Accounts receivable. net P2476300 During the year ended December 31, 201 B, Kurapika earned sales revenue of P645,243,000 and collected cash of P633.684.600 from customers. Assume that the bad debt expense for the year was 1% of sales revenue and that Kurapika wrote of uncollectible accounts receivable totaling P6,527,400. 3. What are the accounts receivable balance on December 31, 201B? 4. What is the balance of Allowance for Uncollectible Accounts account at December 31, 201 B? The following information pertains to Leorio. Inc. for the year ended December 31. 201 C: | Credit sales during 201C | P8,900.000 | Collection of accounts written off in prior periods | 340,000 Worthless accounts written off in 2010 382.000 Allowance for doubtful accOunts, January 1, 201C 310.000 Leorio, Inc. provides for doubtful accOunts based on 1 14% of credit sales. 5. What is the balance of allowance for doubtful accounts at December 31, 201 C? Netero Company's analysis and aging of its accounts receivable at December 31, 201A disclosed the following: P1 150 000 Accounts estimated to be uncollectible er a__in 237 500 Allowance for doubtful accounts -er books 259 000 6. What is the net realizable value of Netero's receivables at December 31, 201A? The following accounts are shown on the 201 B and 201A financial statements of Kite Company: -:m_-m- P470 000 Allowance for doubtful accounts P20 000 2 600 000 2 400 000 Cost of _oods sold 1 900 000 1 752 000 Kite's accounts receivable turnover for 201 B is 6.5 times. 7'. What are the accounts receivable balance on December 31, 201 B? The policy of Biskey. Inc. is to add bad debt expense for 3% of all new sales. The following are the company's sales and allowance for doubtful accounts for the past four (4) years: Year Sales Allowance for Doubtful Accounts Year-End Balance P3 000 000 P45 000 m];- 2 950 000 56 000 3 120 000 so 000 2.420.000 What are the amounts of accounts written off in 201 B, 2010, and 2010? 8. 201 B 9. 201C 1 0. 201D
