Additional Information: 1) A count of the petty cash fund on January 2, 2020 showed its composition as follows Currency and coins P 6,000 Petty cash vouchers, all dated 2019, Except for P 1,500 which pertains to 2020 6,000 Employees postdated check 3,000 Total P 15, 000 2) The following are some of the December 31, 2019 reconciling items noted for cash in bank: a. Customers’ checks returned by the bank marked “DAIF” in December 2019, re- deposited in January 2020, P 35,000. b. A bank credit memo representing collection by bank from one of the company’s major customers, P 40,000. c. A check drawn by another company for P 25,000 Incorrectly charged by bank in December 2019. d. Checks issued by the company in 2019 and not yet cleared by the bank as of December 31, 2019 P 105,000. e. The company wrote several checks at the end of 2017 for accounts payable that were held and not mailed until January 15, 2020. These totaled P 48, 300 and were included in the outstanding checks of December 31, 2019. 3) The audit revealed that Accounts Receivable was composed of the following items: Customers’ accounts P 2,799,000 Advances to officers and employees 120,000 Selling price of merchandise sent to Mobiline Corp. on consignment at 125% of cost and not yet Solid by Mobiline Corp. 625, 000 P 3,544,000 The company has been providing an allowance for doubtful accounts at 5% of the outstanding customers’ balances. 4) A physical inventory of merchandise as of December 31, 2019 amounted to P 4, 398, 900. The following information has been found relating to certain inventory transactions: a. Inventory cut-off tests indicate that P 22, 350 of inventory received on December 30, 2019 was recorded as purchases and accounts payable in 2020. These items were included in the inventory count at year end. b. Inventory cut-off tests also indicate several sales invoices recorded in 2019 for goods that were shipped in early 2020. The goods were not included in inventory, but were set aside in a separate shipping area. The total amount of these shipments was P 36, 000, Cost is P 25, 000. c. A P 35,000 shipment of goods to a customer on December 31, 2019, terms FOB destination, was not included in the year-end inventory. The goods cost P 26, 000 and were received by the customer on January 8, 2020. The sale was properly recorded in 2020. d. An invoice for goods costing P 35, 000 was received and recorded as a purchase on December 31, 2019. The relate goods, shipped FOB destination, were received on January 2, 2020 and thus, were not included in the physical inventory. e. Goods costing P 27, 000 were received from a vendor on January 5, 2020. The related invoice was received and recorded on January 12, 2020. The goods were shipped on December 31, 2019, terms FOB shipping point. 5) The prepaid insurance account contains the premium costs of two policies: Policy A. cost of P 13, 200, two year term taken on September 1, 2019. Policy B. cost of P 16, 200, three year term taken on April 1, 2019. REQUIRED: Assume that all amounts are material and ignore income tax effects. determine the adjusted balances of the following. 1. Advances to Officers and Employees are properly presented as: _________________________________ 2. The inventories in the hands of Mobiline Corp should be: _________________________________ 3. Inventories _________________________________
Additional Information:
1) A count of the petty cash fund on January 2, 2020 showed its composition as
follows
Currency and coins P 6,000
Petty cash vouchers, all dated 2019,
Except for P 1,500 which pertains to 2020 6,000
Employees postdated check 3,000
Total P 15, 000
2) The following are some of the December 31, 2019 reconciling items noted for cash
in bank:
a. Customers’ checks returned by the bank marked “DAIF” in December 2019, re-
deposited in January 2020, P 35,000.
b. A bank credit memo representing collection by bank from one of the company’s
major customers, P 40,000.
c. A check drawn by another company for P 25,000 Incorrectly charged by bank in
December 2019.
d. Checks issued by the company in 2019 and not yet cleared by the bank as of
December 31, 2019 P 105,000.
e. The company wrote several checks at the end of 2017 for accounts payable that
were held and not mailed until January 15, 2020. These totaled P 48, 300 and were
included in the outstanding checks of December 31, 2019.
3) The audit revealed that
Customers’ accounts P 2,799,000
Advances to officers and employees 120,000
Selling price of merchandise sent to Mobiline
Corp. on consignment at 125% of cost and not yet
Solid by Mobiline Corp. 625, 000
P 3,544,000
The company has been providing an allowance for doubtful accounts at 5% of the
outstanding customers’ balances.
4) A physical inventory of merchandise as of December 31, 2019 amounted to P 4,
398, 900. The following information has been found relating to certain inventory
transactions:
a. Inventory cut-off tests indicate that P 22, 350 of inventory received on
December 30, 2019 was recorded as purchases and accounts payable in 2020.
These items were included in the inventory count at year end.
b. Inventory cut-off tests also indicate several sales invoices recorded in 2019 for
goods that were shipped in early 2020. The goods were not included in
inventory, but were set aside in a separate shipping area. The total amount of
these shipments was
P 36, 000, Cost is P 25, 000.
c. A P 35,000 shipment of goods to a customer on December 31, 2019, terms FOB
destination, was not included in the year-end inventory. The goods cost P 26,
000 and were received by the customer on January 8, 2020. The sale was
properly recorded in 2020.
d. An invoice for goods costing P 35, 000 was received and recorded as a purchase
on December 31, 2019. The relate goods, shipped FOB destination, were
received on January 2, 2020 and thus, were not included in the physical
inventory.
e. Goods costing P 27, 000 were received from a vendor on January 5, 2020. The
related invoice was received and recorded on January 12, 2020. The goods were
shipped on December 31, 2019, terms FOB shipping point.
5) The prepaid insurance account contains the premium costs of two policies:
Policy A. cost of P 13, 200, two year term taken on September 1, 2019.
Policy B. cost of P 16, 200, three year term taken on April 1, 2019.
REQUIRED: Assume that all amounts are material and ignore income tax effects. determine the adjusted balances of the following.
1. Advances to Officers and Employees are properly presented as:
_________________________________
2. The inventories in the hands of Mobiline Corp should be:
_________________________________
3. Inventories _________________________________
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