PLEASE ANSWER ASAPProblem No. 5The AACA Company is on a calendar year basis. The following data were found during your audit:Goods costing P30,000 had been received, included in inventory, and recorded as a purchase. However, upon your inspection the goods were found to be defective and would be immediately returned.Goods in transit shipped FOB destination by a supplier, in the amount of P100,000, had been excluded from the inventory, and further testing revealed that the purchase had been recorded.Materials costing P240,000 and billed on December 30 at a selling price of P330,000, had been segregated in the warehouse for shipment to a customer. The materials had been excluded from inventory as a signed purchase order had been received from the customer. Terms, FOB destination.Goods costing P70,000 was out on consignment with White Company. Since the monthly statement from White Company listed those materials as on hand, the items had been excluded from the final inventory and invoiced on December 31 at P80,000.The sale of P150,000 worth of materials and costing P120,000 had been shipped FOB point of shipment on December 31. However, this inventory was found to be included in the final inventory. The sale was properly recorded in 2021.Goods costing P100,000 and selling for P140,000 had been segregated, but not shipped at December 31, and were not included in the inventory. A review of the customer’s purchase order set forth terms as FOB destination. The sale had not been recorded.Your client has an invoice from a supplier, terms FOB shipping point but the goods had not arrived as yet. However, these materials costing P170,000 had been included in the inventory count, but no entry had been made for their purchase.Merchandise costing P200,000 had been recorded as a purchase but not included as inventory. Terms of sale are FOB shipping point according to the supplier’s invoice which had arrived at December 31.Further inspection of the client’s records revealed the following December 31, 2020 balances: Inventory, P1,100,000; Accounts receivable, P580,000; Accounts payable, P690,000; Net sales, P5,050,000; Net purchases, P2,300,000; Net income, P510,000.Based on the above and the result of your audit, determine the adjusted balances of following as of December 31, 2021: Inventory Accounts payable Net sales Net purchases Net income

FOB is also written as freight on board. FOB shipping point means the risk and rewards of ownership…

Answered: The AACA Company is on a calendar year…

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

Chapter22: Accounting For Changes And Errors.

Section: Chapter Questions

Problem 14E: Refer to the information in E22-13. Required: Prepare the correcting journal entries if the company...

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Problem No. 5

The AACA Company is on a calendar year basis. The following data were found during your audit:

Goods costing P30,000 had been received, included in inventory, and recorded as a purchase. However, upon your inspection the goods were found to be defective and would be immediately returned.
Goods in transit shipped FOB destination by a supplier, in the amount of P100,000, had been excluded from the inventory, and further testing revealed that the purchase had been recorded.
Materials costing P240,000 and billed on December 30 at a selling price of P330,000, had been segregated in the warehouse for shipment to a customer. The materials had been excluded from inventory as a signed purchase order had been received from the customer. Terms, FOB destination.
Goods costing P70,000 was out on consignment with White Company. Since the monthly statement from White Company listed those materials as on hand, the items had been excluded from the final inventory and invoiced on December 31 at P80,000.
The sale of P150,000 worth of materials and costing P120,000 had been shipped FOB point of shipment on December 31. However, this inventory was found to be included in the final inventory. The sale was properly recorded in 2021.
Goods costing P100,000 and selling for P140,000 had been segregated, but not shipped at December 31, and were not included in the inventory. A review of the customer’s purchase order set forth terms as FOB destination. The sale had not been recorded.
Your client has an invoice from a supplier, terms FOB shipping point but the goods had not arrived as yet. However, these materials costing P170,000 had been included in the inventory count, but no entry had been made for their purchase.
Merchandise costing P200,000 had been recorded as a purchase but not included as inventory. Terms of sale are FOB shipping point according to the supplier’s invoice which had arrived at December 31.

Further inspection of the client’s records revealed the following December 31, 2020 balances: Inventory, P1,100,000; Accounts receivable, P580,000; Accounts payable, P690,000; Net sales, P5,050,000; Net purchases, P2,300,000; Net income, P510,000.

Based on the above and the result of your audit, determine the adjusted balances of following as of December 31, 2021:

Inventory
Accounts payable
Net sales
Net purchases
Net income

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