PROBLEM 4 You were engaged by Michelle Corporation for the audit of the company's financial statements for the year ended December 31, 2022. The company is engaged in the wholesale business and makes all sales at 25% over cost. The following were gathered from the client's accounting records: Date SALES Ref. Amount Balance forwarded 25,200,000 Date Balance forwarded PURCHASES Ref. Amount P2,700,000 Dec. 27 SI No. 965 40,000 Dec. 27 RR No. 1057 35,000 Dec. 28 SI No. 966 150,000 Dec. 28 RR No. 1058 65,000 Dec. 28 SI No. 967 10,000 Dec. 29 RR No. 1059 24,000 Dec. 31 SI No. 969 46,000 Dec. 30 RR No. 1061 70,000 Dec. 31 SI No. 970 68,000 Dec. 31 RR No. 1062 42,000 Dec. 31 SI No. 971 16,000 Dec. 31 Dec. 31 Closing entry (5,530,000) Dec. 31 RR No. 1063 Closing entry 64,000 (3,000,000) Note: 31 sales invoice RR receiving report Inventory P600,000 500,000 400,000 Accounts receivable Accounts payable You observe the physical inventory of goods in the warehouse on December 31 and were satisfied that it was properly taken. When performing sales and purchases cut-off tests, you found that at December 31, the last Receiving Report which had been used was No. 1063 and that no shipments had been made on any Sales Invoices whose number is larger than No. 968. You also obtained the following additional information: (a) Included in the warehouse physical inventory at December 31 were goods which had been purchased and received on Receiving Report No. 1060 but for which the invoice was not received until the following year. Cost was P18,000. (b) On the evening of December 31, there were two trucks in the company sliding: Truck No. CPA 123 was unloaded on January 2 of the following year and received on Receiving Report No. 1063. The freight was paid by the vendor. Truck No. ILU 143 was loaded and sealed on December 31 but leave the company premises on January 2. This order was sold for P100,000 per Sales Invoice No. 968. (c) Temporarily stranded at December 31 at the railroad siding were two delivery trucks enroute to Brooks Trading Corporation. Brooks received the goods, which were sold on Sales Invoice No. 966 terms FOB Destination, the next day (d) Enroute to the client on December 31 was a truckload of goods, which was received on Receiving Report No. 1064. The goods were shipped FOB Destination, and freight of P2,000 was paid by the client. However, the freight was deducted from the purchase price of P800,000. QUESTIONS: Based on the above and the result of your audit, determine the following: 49. Sales for the year ended December 31, 2022 A. P5,250,000 B. P5,150,000 C. P5,400,000 D. P5,350,000 50. Purchases for the year ended December 31, 2022 A. P3,000,000 B. P3,754,000 C. P3,018,000 D. P3,818,000 51. Inventory as of December 31, 2022 A. P864,000 B. P800,000 C. P968,000 D. P814,000 52. Accounts receivable as of December 31,2022 A. P350,000 B. P220,000 C. P370,000 D. P120,000 Page 9 / 13 53. Accounts payable as of December 31, 2022 A. P418,000 B. P354,000 C. P400,000 D. P1,218,000