Fraud Examination
6th Edition
ISBN: 9781337619677
Author: Albrecht, W. Steve, Chad O., Conan C., Zimbelman, Mark F.
Publisher: Cengage,
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Chapter 14, Problem 3SC
(1)
To determine
The course of action to be taken by the Assistant Controller.
(2)
To determine
The issues in the given case.
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PROBLEM 5: In connection with your audit of VVV Manufacturing Company, you reviewedits inventory as of December 31, 2020 and found the following items:
A. A packing case containing a product costing P100,000 was standing in the shippingroom when the physical inventory was taken. It was not included in the inventorybecause it was marked “Hold for Shipping Instructions”. The customer’s order was dated December 18 but the case was shipped and the customer billed on January 10, 2021.
B. Merchandise costing P600,000 was received on December 28, 2020 and the invoicewas recorded. The invoice was in the hands of the purchasing agents and it was marked, “On Consignment”.
C. Merchandise received on January 6, 2021, costing P700,000 was entered in thepurchase register on January 7. The invoice showed shipment was made FOB shippingpoint on December 31, 2020. Because it was not on hand during the inventory count, it was not included.
D. Merchandise costing P200,000 was received on January 6,…
Problem 3In connection with your observation of the DalandanManufacturing Company, you reviewed its inventory as of December 31, 2019 and found the following items:
➢A packing case containing a product costing P100,000 was standing in the shipping room when the physical inventory was taken. It was not included inthe inventory because it was marked “Hold for shipping instructions.” The customer’s order was dated December 18, but the case was shipped and the costumer billed on January 10, 2020.
➢Merchandise costing P600,000 was received on December 28, 2019, and the invoice was recorded. The invoice was in the hands of the purchasing agent; it was marked “On consignment”.
➢Merchandise received on January 6, 2020, costing P800,000 was entered in purchase register on January 7. The invoice showed shipment was made FOBshipping point on December 31, 2019. Because it was not on hand during the inventory count, it was not included.
➢A special machine costing P200,000, fabricated to order for a…
Problem 8 - Revier Company's records were destroyed by fire. The controller was able in ascertain that sales for the nine month period ending September 30 were P1,250,000. The company's suppliers indicated that merchandise costing P500,000 was delivered for the period. The company's statement indicated that the ending inventory for the previous accounting period was P260,000. The company was reimbursed by its insurance company for P200,000 worth of inventory destroyed by the fire. Insurance companies pay 80% of the cost for casualty of this nature. There were no other inventories on hand.
REUQIRED:
1.Estimate the cost of goods for this period
2.Amount of loss to the company
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Fraud Examination
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- PROBLEM 19: San Juan Manufacturing began operations 5 years ago. On August 13, 2021, a fire broke out in the warehouse destroying all inventory and many records relating to the inventory. The information available is presented below (all sales and purchases are on account): 1/1/2021 8/13/2021 Inventory P 143,850 Accounts receivable 130,590 P 128,890 Accounts payable Collections on accounts 88,140 122,850 receivable, 1/1 to 8/13 753,800 Payments to suppliers, 1/1 to 8/13 487,500 Goods out on consignment at 8/13 at cost 52,900 Summary on previous years’ sales follows: 2018 2019 2020 Sales P 626,000P P705,000 P 680,000 Gross profit 187,800 225,600 231,200 24. What is the inventory loss suffered as a result of the fire if the average gross profit rate is used? 25. What is the inventory loss suffered as a result of the fire if the trend in gross profit rate continues?arrow_forwardQuestion 3: On 20 June 2019 , the warehouse and attached business premises of Fashion Wear Cloth Mill SAOC were affected by fire. The following information is available from the salvaged books of account. Amount (OMR) Stock of goods @ 10% lower than cost as on January 1, 2019 216,000 Purchases less returns (January 1, 2019, to June 20, 2019) 280000 Sales less returns (January 1, 2019, to June 20, 2019) 620000 Additional Information : Sales up to June 20, 2019, include OMR 80,000 worth of goods which had not been dispatched. Purchases up to June 20, 2019, did not include OMR 40,000 worth of goods for which purchase invoices had not been received from the suppliers, but the goods had been received in stored in the warehouse. Past records show the gross profit rate of 25 % Value of goods salvaged OMR 31,000 Fashion Wear had insured their stock for OMR 85,000. You are required to compute the amount of claim to be lodged with the insurer justifying the…arrow_forward(Inventoriable Goods and Costs) You are asked to travel to Milwaukee to observe and verify the inventory of the Milwaukee branch of one of your clients. You arrive on Thursday, December 30, and find that the inventory procedures have just been started. You spot a railway car on the sidetrack at the unloading door and ask the warehouse superintendent, Buck Rogers, how he plans to inventory the contents of the car. He responds, “We are not going to include the contents in the inventory.”Later in the day, you ask the bookkeeper for the invoice on the carload and the related freight bill. The invoice lists the various items, prices, and extensions of the goods in the car. You note that the carload was shipped December 24 from Albuquerque, f.o.b. Albuquerque, and that the total invoice price of the goods in the car was $35,300. The freight bill called for a payment of $1,500. Terms were net 30 days. The bookkeeper affirms the fact that this invoice is to be held for recording in…arrow_forward
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