Accounting Reviewers
Problem no.1
In connection with the audit of the PAKYO COMPANY for the year ended December 31, 2010 you are called upon to verify the accounts payable transactions. You find that the company does not make use of a voucher register but enters all merchandise purchases in a Purchases Journal, from which posting are made to a subsidiary accounts payable ledger. The subsidiary ledger balance of P1,500,000 as of December 31, 2010 agrees with the accounts payable balance in the company’s general ledger. An analysis of the account disclosed the following:
Trade creditors, credit balances P 1,363,000 Trade creditors, debit balances 63,000 Net P 1,300,000 Estimated warranty on products sold 100,000 Customer’s deposits 9,000 Due to officers and shareholders for advances 50,000 Goods received on consignment at selling price (offsetting debit made to Purchases) 41,000 P 1,500,000
A further analysis of the “Trade Creditors” debit balances indicates:
Date Items Amount Miscellaneous debit balances prior to 2007. No information available due to loss of records in a fire. P 3,000
03/03/07 Manila Co. –Merchandise returned for credit, but the company is now out of business 8,000
06/10/09 Cebu Corp. – Merchandise returned but Cebu says “never received” 7,000
07/10/10 Jolo Distributors – Allowance granted on defective merchandise after the invoice was paid 5,000
10/10/10 Bulacan Co – Overpayment of invoice 12,000
12/05/10 Advance to Zambales Co. This company agrees to supply certain articles on a cost –plus basis 24,000
12/05/10 Goods returned for credit and adjustments on price after the invoices were paid; credit memos from supplier not yet received 4,000 63,000
Your next step is to check the invoices in both the paid and the unpaid invoice files
In connection with the audit of the PAKYO COMPANY for the year ended December 31, 2010 you are called upon to verify the accounts payable transactions. You find that the company does not make use of a voucher register but enters all merchandise purchases in a Purchases Journal, from which posting are made to a subsidiary accounts payable ledger. The subsidiary ledger balance of P1,500,000 as of December 31, 2010 agrees with the accounts payable balance in the company’s general ledger. An analysis of the account disclosed the following:
Trade creditors, credit balances P 1,363,000 Trade creditors, debit balances 63,000 Net P 1,300,000 Estimated warranty on products sold 100,000 Customer’s deposits 9,000 Due to officers and shareholders for advances 50,000 Goods received on consignment at selling price (offsetting debit made to Purchases) 41,000 P 1,500,000
A further analysis of the “Trade Creditors” debit balances indicates:
Date Items Amount Miscellaneous debit balances prior to 2007. No information available due to loss of records in a fire. P 3,000
03/03/07 Manila Co. –Merchandise returned for credit, but the company is now out of business 8,000
06/10/09 Cebu Corp. – Merchandise returned but Cebu says “never received” 7,000
07/10/10 Jolo Distributors – Allowance granted on defective merchandise after the invoice was paid 5,000
10/10/10 Bulacan Co – Overpayment of invoice 12,000
12/05/10 Advance to Zambales Co. This company agrees to supply certain articles on a cost –plus basis 24,000
12/05/10 Goods returned for credit and adjustments on price after the invoices were paid; credit memos from supplier not yet received 4,000 63,000
Your next step is to check the invoices in both the paid and the unpaid invoice files