compute the adjusted balances of the following accounts: 1. Net sales 2. Total purchases 3. Cost of sales
compute the adjusted balances of the following accounts: 1. Net sales 2. Total purchases 3. Cost of sales
Auditing: A Risk Based-Approach (MindTap Course List)
11th Edition
ISBN:9781337619455
Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg
Publisher:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg
Chapter10: Auditing Cash, Marketable Securities, And Complex Financial Instruments
Section: Chapter Questions
Problem 18RQSC
Related questions
Question
compute the adjusted balances of the following accounts:
1. Net sales
2. Total purchases
3. Cost of sales
![5. The following information was prepared by the bookkeeper during the audit of the financial statements of
TANGA Corporation for the calendar year ended December 31, 2020:
Cash receipts:
Collection of accounts receivable
Less: discounts taken
Cash sales of merchandise
Sale of warehouse equipment
Insurance proceed from boiler explosion
Sale of land on November 1
Cash disbursements:
Payment to trade creditors
General and administrative expenses
Cash purchases of merchandise
Repairs made on warranty contracts
Purchased of land on May 1
Purchase on November 10 of 100 shares of Wood Company stock
756,500
6,500
750,000
80,000
6,000
21,000
10,000
603,000
102,000
60,000
3,200
8,000
16,000](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fb5b87e02-9288-464a-bd7d-a23d9341784c%2F8e9c8e71-9122-41e1-84b4-a5a73f1c5842%2Flid8ex_processed.png&w=3840&q=75)
Transcribed Image Text:5. The following information was prepared by the bookkeeper during the audit of the financial statements of
TANGA Corporation for the calendar year ended December 31, 2020:
Cash receipts:
Collection of accounts receivable
Less: discounts taken
Cash sales of merchandise
Sale of warehouse equipment
Insurance proceed from boiler explosion
Sale of land on November 1
Cash disbursements:
Payment to trade creditors
General and administrative expenses
Cash purchases of merchandise
Repairs made on warranty contracts
Purchased of land on May 1
Purchase on November 10 of 100 shares of Wood Company stock
756,500
6,500
750,000
80,000
6,000
21,000
10,000
603,000
102,000
60,000
3,200
8,000
16,000
![Supplementary information:
1. The following account balances were taken from the general ledger:
December 31, 2019
Accounts receivable
Inventory
Prepaid expenses
Accrued expenses
Accounts payable
62,000
93,000
4,800
3,500
191,000
December 31, 2020
73,000
95,000
4,200
4,500
205,000
2.
Depreciation for 2020 was P42,000.
3. The warehouse equipment sold during 2020 was acquired in 2015 at a cost of P16,500. The double declining
method of depreciation was used and accumulated charges were P8,000 at the date of sale. If the straight
line method had been used the accumulated depreciation would have been P5,000.
4. An explosion occurred on January 15, 2020 in which a boiler, not the structural component of a building,
was completely destroyed. It was purchased in January 2013 at a cost of P24,000; depreciation was
recorded by the straight line method and P10,000 had accumulated at the date of explosion.
5. Land was purchased on May 1, 2020 and was used as a storage facility. It was found to be unsuitable for
this purpose and was sold on November 1, 2020.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fb5b87e02-9288-464a-bd7d-a23d9341784c%2F8e9c8e71-9122-41e1-84b4-a5a73f1c5842%2Fexveajo_processed.png&w=3840&q=75)
Transcribed Image Text:Supplementary information:
1. The following account balances were taken from the general ledger:
December 31, 2019
Accounts receivable
Inventory
Prepaid expenses
Accrued expenses
Accounts payable
62,000
93,000
4,800
3,500
191,000
December 31, 2020
73,000
95,000
4,200
4,500
205,000
2.
Depreciation for 2020 was P42,000.
3. The warehouse equipment sold during 2020 was acquired in 2015 at a cost of P16,500. The double declining
method of depreciation was used and accumulated charges were P8,000 at the date of sale. If the straight
line method had been used the accumulated depreciation would have been P5,000.
4. An explosion occurred on January 15, 2020 in which a boiler, not the structural component of a building,
was completely destroyed. It was purchased in January 2013 at a cost of P24,000; depreciation was
recorded by the straight line method and P10,000 had accumulated at the date of explosion.
5. Land was purchased on May 1, 2020 and was used as a storage facility. It was found to be unsuitable for
this purpose and was sold on November 1, 2020.
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