So, owner of a trading company engaged your services as auditor. There is a discrepancy between the company’s income and the sales volume. The owner suspects that the staff is committing theft. You are to determine whether or not this is true. Your investigation revealed the following: The physical taken on December 31, 2018 under your observation showed that cost was P26,500. The inventory on January 1, 2018 showed cost of P39,000. The accounts receivable as of January 1, 2018 were P13,500. During 2018, accounts receivable written off amounted to P1,000. Accounts receivable as of December 31, 2018 were P37,500. Outstanding purchase invoices amounted to P30,000 at the end of 2018. At the beginning of 2018, they were P37,500. Receipts from customers during 2018 amounted to P300,000. Disbursement to merchandise creditors amounted to P200,000. The average gross profit rate was 40% of net sales.   Required: Total Sales Total Purchases Inventory Shortage

You own a retailer of boats, motors, and marine accessories. The store manager has just informed you that the amount of the physical inventory was incorrectly reported as $610,000 instead of the correct amount of $160,000. Unfortunately, yesterday you sent the quarterly financial statements to the stockholders. Now you must send revised statements and a letter of explanation. (a) What effect did the error have on the items of the balance sheet for the retailer? Express your answer as overstated or understated for the items affected by the error. Merchandise inventory was      by $   . Therefore, Current assets, Total assets, and Total stockholders' equity were      by $  . (b) What effect will the error have on the items of the income statement for the retailer? The cost of goods sold was      by $  . Therefore, gross profit and net income were      by $  . (c) Did this error make the retailer's quarterly results look better or worse than they actually were? The inventory…

You own a retailer of boats, motors, and marine accessories. The store manager has just informed you that the amount of the physical inventory was incorrectly reported as $210,000 instead of the correct amount of $120,000. Unfortunately, yesterday you sent the quarterly financial statements to the stockholders. Now you must send revised statements and a letter of explanation. (a) What effect did the error have on the items of the balance sheet for the retailer? Express your answer as overstated or understated for the items affected by the error. Merchandise inventory was  ---Select--- overstated understated by $  . Therefore, Current assets, Total assets, and Total stockholders' equity were  ---Select--- overstated understated by $  . (b) What effect will the error have on the items of the income statement for the retailer? The cost of goods sold was  ---Select--- overstated understated by $  . Therefore, gross profit and net income were  ---Select--- overstated understated by $…

Guthrie Company receives orders from customers and records revenue at that time, even though it has not yet delivered products or services to the customers. what accounting assumption violate and how it should be done? Because of inflation, Cross Company adjusts its financial statements each year to show the current purchasing power for all items.what accounting assumption violate and how it should be done? David Thomas combines his personal transactions and business transactions when he prepares his company’s financial statements so that he can tell how well he is doing on an “overall” basis.what accounting assumption violate and how it should be done? At the end of each year, Vann Company reports its economic resources on a liquidation basis even though it is likely to operate in the future. what accounting assumption violate and how it should be done?

Zach Allen is the accountant for a large retail company. It is now the end of the accounting period and time to prepare financial statements. Zach has requested that the company's sales manager give him an estimate of uncollectible credit sales for the period. Zach says that he needs this information so that he can record bad debt expense. The sales manager tells Zach to "not worry about it. You can just record the expense as the accounts become uncollectible." Comment on this situation and who you think is right. Do you see any problem with the "wait and record approach"?

You own a retailer of boats, motors, and marine accessories. The store manager has just informed you that the amount of the physical inventory was incorrectly reported as $820,000 instead of the correct amount of $280,000. Unfortunately, yesterday you sent the quarterly financial statements to the stockholders. Now you must send revised statements and a letter of explanation. (a) What effect did the error have on the items of the balance sheet for the retailer? Express your answer as overstated or understated for the items affected by the error. Merchandise inventory was --Select-- | by $ Therefore, Current assets, Total assets, and Total stockholders' equity were -Salech- by $ (b) What effect will the error have on the items of the income statement for the retailer? The cost of goods sold was by $ . Therefore, gross profit and net income were -Select- Select- | by $ (e) Did this error make the retailer's quarterly results look better or worse than they actually were? The inventory…

You own a retailer of boats, motors, and marine accessories. The store manager has just informed you that the amount of the physical inventory was incorrectly reported as $960,000 instead of the correct amount of $690,000. Unfortunately, yesterday you sent the quarterly financial statements to the stockholders. Now you must send revised statements and a letter of explanation. (a) What effect did the error have on the items of the balance sheet for the retailer? Express your answer as overstated or understated for the items affected by the error. Merchandise inventory was overstated ✓by $ Therefore, Current assets, Total assets, and Total stockholders' equity were overstated ✓ by $ (b) What effect will the error have on the items of the income statement for the retailer? The cost of goods sold was understated by $ Therefore, gross profit and net income were overstated (c) Did this error make the retailer's quarterly results look better or worse than they actually were? The inventory…

You own a retailer of boats, motors, and marine accessories. The store manager has just informed you that the amount of the physical inventory was incorrectly reported as $630,000 instead of the correct amount of $360,000. Unfortunately, yesterday you sent the quarterly financial statements to the stockholders. Now you must send revised statements and a letter of explanation. (a) What effect did the error have on the items of the balance sheet for the retailer? Express your answer as overstatedor understated for the items affected by the error. Merchandise inventory was     by $ . Therefore, Current assets, Total assets, and Total stockholders' equity were     by $ . (b) What effect will the error have on the items of the income statement for the retailer? The cost of goods sold was     by $ . Therefore, gross profit and net income were     by $ . (c) Did this error make the retailer's quarterly results look better or worse than they actually were? The inventory error made…

You joined Henderson Technology Limited as accounting manager recently.  In a management meeting, William Buckle, the managing director, expressed his concern on an amount due from Hunters Limited, which is long overdue and is unlikely to be recoverable. In a review of the aged debtors report, you found that over 40% of the debtors have overdue accounts.  You also noted that there is no control system in place.  You believe a better credit control system would help.        You are required to prepare notes for your meeting with William, to outline the objective of having a control system in place, and the key points of a credit control system that would help to reduce overdue accounts.