FINAL PREBOARD OCTOBER 2016 CPAR - AUDITING PROBLEMS
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You have been engaged to audit MASINAG COMPANY, a trading company, for the year ended
December 31, 2016. The company’s unadjusted trial balance as of December 31, 2016 is
presented below:
During the course of your audit, you obtained additional information relative to the accounts in
the trial balance, as follows:
CASH
1. Your audit of Cash disclosed that on December 29, 2016, Masinag recorded and wrote check
payments to merchandise suppliers amounting to P150,000. Several checks amounting to
P60,000 were issued on January 4, 2017.
2. On December 29, 2016, a customer’s check for P3,000 was returned by the bank and marked
“DAUD” (drawn against uncleared deposit). Corresponding entry was made by the client on
January 2, 2017.
3. Verification of the other reconciling items in the bank reconciliation statement as of December
31, 2016, revealed the following:
c) A bank debit memo dated December 15, 2016, for P123,750 representing payment of a
six-month loan inclusive of interest of P3,750.
d) Several bank deposits directly made by the customer in December 2016 totaling P22,500.
e) Interest income on various savings account deposits, P4,800.
f) Undeposited collections from customers P10,500 received by the bank on January 2, 2017.
4. Included in the cash account is petty cash fund of P3,000. Among the fund items found
during January 2, 2017 count were:
Currency and coins ................................................................................P 900
IOUs of employees dated December 29, 2016 ..............................................600
Unreplenished vouchers for expense dated December 29, 2016.......................600
Personal checks of the petty cash custodian dated January 5, 2017 ............ 900
Total..................................................................................................P3,000
FINANCIAL ASSETS HELD FOR TRADING
5. Analysis of the trading securities revealed the recording of the following transactions:
2016 Debit Credit
Jan. 15 Purchased 20,000 shares of Perlas Company P150,000
July 15 Received cash dividend P 12,000
Sept. 30 Received 2,000 share dividend, market value per
Share was P8.10 (Note 1) 16,200
Nov. 30 Sold 4,000 shares for P9 per share 39,600
166,200 51,600
Dec. 31 Balance 114,600
P166,200 P166,200
Note 1 Dividend income was credited for the same amount
Note 2 Market value per share of Perlas Company at December 31, 2016, was P9.30
ACCOUNTS RECEIVABLE
6. Analysis of accounting records revealed that all receivables are being recorded in a single
account—Accounts Receivable. The entries to this account are summarized below:
Debits
Jan. 1 Balance after deducting credit balance of P6,000..........................P 159,000
Charge sales.....................................................................................1,951,770
Charge for goods out on consignment (Note 1).........................................225,000
Refund to customers for January 1 credit balance.........................................6,000
Claim against common carrier for shipping damages ....................................9,000
IOUs from employees ..............................................................................1,500
Advances to suppliers ...................................................................... 15,000
Total .............................................................................................P2,367,270
Credits
CPA REVIEW SCHOOL OF THE PHILIPPINES (CPAR) – MANILA FINAL PREBOARD EXAMINATION
AUDITING PROBLEMS SEPTEMBER 10,2016 / SATURDAY / 9:30AM – 12:30PM
Collections from customers, including overpayment of P15,000 .............P1,950,000
Write offs ...............................................................................................9,000
Merchandise returns and allowances.........................................................16,770
