Problem 1.6: The records of your audit client, Anna Corp., which maintains records under cash-basis, revealed total payments made to supplier of merchandise amounted to P 1,250,000. Based on Audit investigation, they revealed that the additional information are the following: Accounts payable, January 1, 2021 Accounts payable, December 31, 2021 Notes payable-trade, January 1, 2021 Notes payable-trade, December 31, 2021 Merchandise inventories, January 1, 2021 Merchandise inventories, December 31, 2021 Purchase discounts Purchase returns before any payments were made, thus credit memos were received from the suppliers Purchase returns after payments were made, thus, cash was received from suppliers as refunds Requirements: Compute for the following under the accrual method: 1. Gross purchases for the year 2. Cost of goods sold for the year 75,000 108,000 57,000 42,000 189,000 243,000 45,000 55,000 25,000

Problem 1.6: The records of your audit client, Anna Corp., which maintains records under cash-basis, revealed total payments made to supplier of merchandise amounted to P 1,250,000. Based on Audit investigation, they revealed that the additional information are the following: Accounts payable, January 1, 2021 Accounts payable, December 31, 2021 Notes payable-trade, January 1, 2021 Notes payable-trade, December 31, 2021 Merchandise inventories, January 1, 2021 Merchandise inventories, December 31, 2021 Purchase discounts Purchase returns before any payments were made, thus credit memos were received from the suppliers Purchase returns after payments were made, thus, cash was received from suppliers as refunds Requirements: Compute for the following under the accrual method: 1. Gross purchases for the year 2. Cost of goods sold for the year 75,000 108,000 57,000 42,000 189,000 243,000 45,000 55,000 25,000

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter8: Inventories: Special Valuation Issues

Section: Chapter Questions

Problem 5C: Gross Profit Shelly Corporation is an importer and wholesaler. Its merchandise is purchased from...

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Gross Profit Shelly Corporation is an importer and wholesaler. Its merchandise is purchased from several suppliers and is warehoused by Shelly until sold to consumers. In conducting her audit for the year ended June 30, 2019, the corporations CPA determined that the system of internal control was good. Accordingly, she observed the physical inventory at an interim date, May 31, 2019, instead of at year-end. The CPA obtained the following information from the general ledger: The CPAs audit disclosed the following information: Required: In audit engagements in which interim physical inventories are observed, a frequently used auditing procedure is to test the reasonableness of the year-end inventory by the application of gross profit ratios. Prepare in good form the following schedules: 1. Computation of the gross profit ratio for 11 months ended May 31, 2019 2. Computation by the gross profit ratio method of cost of goods sold during June 2019 3. Computation by the gross profit ratio method of June 30, 2019 inventory
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