You were able to gather the following from your first-time audit client, ABC Corporation, as of and for the period ended December 31, 2021: Supplies bought last October 20, 2020; 10% used during 2020; 20% remaining as of December 31, 2021; entry made in 2020 includes a debit to expense for the whole amount 50,000 Advance rental payment for 3 months paid to lessor on November 30, 2021; amount charged to rent expense; no adjusting entry made Sales recorded on January 2, 2022 pertaining to a 30,000 merchandise shipped to a customer last December 28, 2021; FOB Shipping point 120,000 Purchases recorded last December 30, 2021; merchandise was shipped last December 29, 2021, received January 3, 2022; FOB Destination Interest on an amount lent to a borrower; note was received last December 1, 2021; term is 6 months; face value is P100,000; no interest income recorded; 45,000 9% interest rate per annum is A minor repair on an equipment on January 2, 2021 was capitalized; the useful life of the equipment on January 2, 2021 was 6 years 300,000
You were able to gather the following from your first-time audit client, ABC Corporation, as of and for the period ended December 31, 2021: Supplies bought last October 20, 2020; 10% used during 2020; 20% remaining as of December 31, 2021; entry made in 2020 includes a debit to expense for the whole amount 50,000 Advance rental payment for 3 months paid to lessor on November 30, 2021; amount charged to rent expense; no adjusting entry made Sales recorded on January 2, 2022 pertaining to a 30,000 merchandise shipped to a customer last December 28, 2021; FOB Shipping point 120,000 Purchases recorded last December 30, 2021; merchandise was shipped last December 29, 2021, received January 3, 2022; FOB Destination Interest on an amount lent to a borrower; note was received last December 1, 2021; term is 6 months; face value is P100,000; no interest income recorded; 45,000 9% interest rate per annum is A minor repair on an equipment on January 2, 2021 was capitalized; the useful life of the equipment on January 2, 2021 was 6 years 300,000
Auditing: A Risk Based-Approach to Conducting a Quality Audit
10th Edition
ISBN:9781305080577
Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg
Publisher:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg
Chapter14: Activities Required In Completing A Quality Audit
Section: Chapter Questions
Problem 87RSCQ
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At the end of the accounting period, a financial statement is prepared by every company, then at that time while preparing the financial statement, the company determines among its total receivable amount how much portion of receivables is collected by the company during that accounting period.
Accounts Receivable
The word “account receivable” means the payment is yet to be made for the work that is already done. Generally, each and every business sells its goods and services either in cash or in credit. So, when the goods are sold on credit account receivable arise which means the company is going to get the payment from its customer to whom the goods are sold on credit. Usually, the credit period may be for a very short period of time and in some rare cases it takes a year.
Question
required:
1. Determine the net increase/decrease in net income for 2021.
2.Prepare a compound
for 2021, assuming that the books of 2021 are still open (do not use “income
summary” as an account title).
Transcribed Image Text:You were able to gather the following from your first-time audit client, ABC Corporation, as of and for the
period ended December 31, 2021:
Supplies bought last October 20, 2020; 10% used during
2020; 20% remaining as of December 31, 2021; entry
made in 2020 includes a debit to expense for the
whole amount
50,000
Advance rental payment for 3 months paid to lessor on
November 30, 2021; amount charged to rent expense;
no adjusting entry made
Sales recorded on January 2, 2022 pertaining to a
30,000
merchandise shipped to a customer last December
28, 2021; FOB Shipping point
Purchases recorded last December 30, 2021; merchandise
was shipped last December 29, 2021, received
120,000
January 3, 2022; FOB Destination
Interest on an amount lent to a borrower; note was
received last December 1, 2021; term is 6 months;
45,000
face value is P100,000; no interest income recorded;
interest rate per annum is
A minor repair on an equipment on January 2, 2021 was
capitalized; the useful life of the equipment on
January 2, 2021 was 6 years
9%
300,000
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