please answer the following. thanks CHAPTER 11: ERROR CORRECTION; CASH/ACCRUAL AND SINGLE ENTRYYour audit of Edu Company revealed that your client kept very limited records. Purchases ofmerchandise were paid for by check, but most other items were out of cash receipts. Thecompany's collections were deposited weekly. No record was kept of cash in the bank, nor wasthese copies were given to the customers when paying their accounts.a record kept of sales. Accounts receivable were recorded only by keeping copy of tickets, andAudit notes:a. The company started its operations on January 2, 2018 and issue common stock,216,000 shares with 100 par, for the following considerations:c.d.CHAPTER 11-PROBLEM 11:CashBuilding, useful life of 15 yearsLandb. An analysis of the bank statements showed total deposits, including original cashinvestment, of P12,600,000. The balance in the bank statement on December 31,P1,800,00016,200,0005,400,0002018, was P900,000. but there were checks amounting to P180,000 dated in Decemberbut not paid by the bank until January 2019. Cash on hand on December 31, 2018 wasP450,000 including customers' deposit of P135,000.During the year, Edu borrowed P1,800,000 from the bank and repaid P450,000 andP90,000 interest. P30,000 in accrued interest is unpaid by the end of the year.Disbursements paid in cash during the year were as follows: Utilities, P360,000;Salaries, P360,000; Supplies, P720,000, and; Dividends, P540,000. Year-end balancesof related accounts are: Utilities payable, P40,000; Salaries payable, P25,000; Unusedsupplies, P150,000; Dividends payable, P60,000.e.An inventory of merchandise taken on December 31, 2018 showed P2,718,000 ofmerchandise.f. Tickets for accounts receivable totaled P3,240,000 but P180,000 of that amount mayprove uncollectible.9. Unpaid supplier invoices for merchandise amounted to P1,260,000.h. Equipment with a cash price of P1,440,000 was purchased in early January on one-yearinstallment basis. During the year, checks for the down payment and all maturinginstallments totaled P1,602,000. The equipment has a useful life of 5 years.2. Gross sales, accrual basis in 20183. Payments for merchandise purchases in 2018Based on the above and the result of your audit, determine the following:1. Collections from customers in 20184. Gross purchases, accrual basis in 20185. Cost of goods sold in 20186. Net income for the year ended December 31, 2018AUDITING PRACTICE (2022 Ed.)/CTEspenilla 379

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Based on the above and the result of you 1. Collections from customers in 2018 2. Gross sales, accrual basis in 2018 3. Payments for merchandise purchases in 2018 in 2018