Specific Topic: Audit of Receivables

2. Today, you are task to audit Gumamela Company. As per your observation, your client has not prepared the nancial statements for 2018, 2019 and 2020. During this period, no accounts have been written off as uncollectible, and the rate of gross prot on sales has remained constant for each of the three years. Before January 1, 2018, the client used the accrual method of accounting. Starting January 1, 2018 to December 31, 2020, only cash receipts and disbursements records were maintained. When sales on account were made, they were entered in the subsidiary accounts receivable ledger. N0 general ledger postings have been made since December 31, 2017. As a result of your examination, the correct data shown in the table below are available 12/31/2017 12/31/2020 Accounts receivable balances: Less than one year old 15,400 28,200 One to two years old 1,200 1,800 Two to three years old 800 Over three years old 3,300 Total accounts receivable 16,600 35,100 Inventories 11,600 18,800 Accounts payable for inventory purchased 5,000 15,300 Cash received on accounts receivable in: 2018 2019 2020 Applied to: Current year collections 148,800 161,800 208,800 Accounts of the prior year 14,300 15,000 18,600 Accounts of two years prior 600 00 2 000 Total 163,200 122,200 222,400 Cash sales 1 000 26 000 100 Cash disbursements for inventory purchased 152,000 115,200 32,800 Requirements: a. Compute for the company's sales for the three-year period. b. Compute for the aggregate amount of purchases for the three-year period. c. Compute for the company's gross prot ratio. d. Compute for the company's gross prot for 2018, 2019 and 2020