problem 3.3

problem 4.3

problem 5.2

PROBLEM 5.2 Prepare the audit adjusting entries assuming that these errors were discovered in the course of your examination of the 2020 financial statements. 1. Failed to accrue wages, P160,000 at the end of 2019. 2. Accrued interest income of P48,000 in 2019 was recorded only when paid in January 2020. 3. An insurance premium covering three years (2019, 2020 and 2021) was paid in January 2019. All of the P54,000 premium had been charged to insurance expense in 2019. No adjustments were made in 2019 and 2020 related to this transaction. 4. Failed to record P25,000 unused office supplies at December 31, 2019. Cash expenditure of P45,000 had been charged to an office supplies expense account during the year 2019. 5. Research and development costs of P120,000 were incurred early in 2019. They were capitalized and were being amortized over a three-year period. Amortization was recorded in 2019 and 2020. None of the development costs meet the criteria for capitalization. 6. At the beginning of 2019, the company received P120,000 cash from a customer for services the company is to perform evenly over a three-year period. Full amount was recorded ad revenue in 2019 and no adjustment was taken up at year-end. 7. Unearned rent of P36,000 was not recorded at the end of 2019. 8. A capital expenditure of P1,500,000 at January 1, 2018 for office equipment (useful life, 5 years) was erroneously charged to maintenance expense.PROBLEM 4.3 Mega Company has gathered the following information about changes which took place in the statement of financial position accounts during the current year: Cash (150,000) Accounts receivable, net 300,000 Inventory 1,500,000 Property, plant and equipment 500,000 Accumulated depreciation (180,000) Intangible assets, net of amortization 275,000 Accrued expenses (50,000) Accounts payable (320,000) Note payable - short term debt (700,000 Bonds payable (250,0000 Ordinary shares capital, P5 par (125,000) Share premium (200,000) Retained earnings (600,000) Equipment which had originally cost P200,000 and had a carrying amount of zero was thrown away. Equipment with a cost of P150,000 and accumulated depreciation of P100,000 was sold for P50,000. Some new equipment was purchased during the year. An intangible asset was acquired during the year for 25,000 ordinary shares. The shares were selling for P13 a share at the time. A full year's amortization expense was recorded in the current year. The entity retires P2,500,000 of 10% bonds at par and issued P2,750,000 of 8% bonds at par. The income statement reported revenue of P7,000,000 and expenses of P5,000,000. ( IV - 20 ] CHAPTER 4: AUDIT OF FINANCIAL PERFORMANCE, FINANCIAL POSITION AND STATEMENT OF CASH FLOWS 1. What is the net cash provided by operating activities? a. 1,000,000 C. 1,050,000 b. 1,800,000 d. 1,100,000 2. What is the net cash used in investing activities? a. 850,000 C. 900,000 b. 800,000 d. 950,000 3. What is the net cash used in financing activities? a. 250,000 C. 950,000 b. 450,000 d. 125,000PROBLEM 3.3 Playlist Corporation recently hired new accountant with very limited experience in corporation accounting. During the first month, he made the following entries for the corporation's share capital. Jan. 2 Cash 200,000 Share Capital 200,000 Issued 10,000 of P5 par value ordinary share at P20 per share. Jan. 10 Cash 600,000 Share capital 600,000 Issued 15,000 of P30 par value preference shares at P40 per share Jan. 15 Share capital 8,000 Cash 8,000 Purchased 1,000 ordinary shares for the treasury at P8 per share Jan. 31 Cash 1,000 Loss on sale of share capital 1,500 Share capital 2,500 Sold 500 treasury shares at P2 per share Required: 1. Prepare the necessary correcting entries