Error correction: Nine ball

You were engaged to audit the financial statements Nine Ball Corporation in relation to its application

for a bank loan. Nine Ball Corporation maintains accounting records under cash-basis accounting. The

following were discovered in line with your investigations:

a. Summary of cash transactions were as follows:

CASH RECEIPTS:

Collections from customers 28,Interest on notes receivable 260,000

Purchase returns 180,000

Sale of an equipment 280,000

CASH DISBURSEMENTS:

Payments to suppliers of merchandise 17,590,000

Sales returns 190,000

Rent 766,000

Salaries 7,856,000

Equipment 850,000

Miscellaneous expenses 345,000

Dividends 1,000,000

b. The following changes in account balances would have been observed had accrual basis been

used.

INCREASES

Cash 4,200,000

Accounts receivable 1,980,000

Accounts payable 970,000

Advances to suppliers 523,000

Prepaid rent 140,000

Accumulated depreciation 150,000

Allowance for bad debt 226,000

DECREASES

Interest receivable 60,000

Equipment 100,000

Notes receivable - trade 600,000

Accrued salaries expense 300,000

Inventory 1,146,000

c. Additional information:

Total purchase returns and allowances amounted to P350,000 (including the refunded

portion) while the total sales returns and allowances amounted to P480,000 (including

the refunded portion).

Total sales discounts and purchases discounts were at P415,000 and P394,000

respectively.

Receivables amounting to P248,000 were written off during the year, while a P94,000

recovery from previous write-off was made.

The equipment sold during the year had a carrying value of P360,000 on the date of

sale.

Required: Determine the audited balances of the following:

52. Net sales

53. Net purchases

54. Cost of sales

55. Depreciation expense

56. Bad debt expense

57. Salaries expense

58. Net income