02sol - Receivables Wb 1st

II – AUDIT OF RECEIVABLES SUMMARY OF PROBLEMS PROBLEM NO. 1 – Composition of trade and other receivables PROBLEM NO. 2 – Computation of adjusted accounts receivable (including preparation of adjusting entries) PROBLEM NO. 3 – Audit of accounts receivable and related accounts (including preparation of adjusting entries) PROBLEM NO. 4 – Audit of allowance for doubtful accounts (including preparation of adjusting entries) PROBLEM NO. 5 – Analysis of accounts receivable and related accounts PROBLEM NO. 6 – Audit of accounts receivable and related accounts (including preparation of adjusting entries) PROBLEM NO. 7 – Analysis of notes receivable and related accounts PROBLEM NO. 8 – Audit of notes receivable and related accounts (including preparation of adjusting entries) PROBLEM NO. 9 – Audit of notes receivable and related accounts PROBLEM NO. 10 – Analysis of notes receivable and related accounts (including preparation of adjusting entries) PROBLEM NO. 11 – Loan impairment PROBLEM NO. 12 – Theory

PROBLEM NO. 1 - Ipil-Ipil Company Items included: Trade accounts receivable (see computation below Advance payments to creditors on purchase orders Interest receivable on bonds Subscriptions receivable due in 30 days Trade and other receivables Composition of trade accounts receivable: Other trade accounts receivable – unassigned Trade accounts receivable - assigned Trade installment receivable due 1 – 18 months, net of unearned finance charges of P2,000 Trade receivables from officers due currently Trade accounts on which post-dated checks are held (no entries were made on receipts of checks) Trade accounts receivable Items not included: Accounts known to be worthless Advances to affiliated companies Customers' account with credit balance

91,500 10,000 10,000 55,000 166,500

50,000 15,000 20,000 1,500 5,000 91,500

2,500 Write off 25,000 Noncurrent investment (15,000) Trade and other payables

PROBLEM NO. 2 - Beatles Company Requirement No. 1 1)

2)

Love M. Do Sales returns Accounts receivable

92,000 92,000

Strawberry Fields None

3) This Boy Company None, this is misposting only in the SL. However, the customers' ledger should be adjusted. 4)

5)

6)

Girl Corporation Sales Accounts receivable

40,000 40,000

Ticket To Ride Corp. Accounts receivable-Nontrade Accounts receivable

160,000

Let It Be Corp Cash Accounts receivable

124,000

160,000

124,000

7)

Hey Jude None, this is misposting only in the SL. However, the customers' ledger should be adjusted.

8)

Get Back Company None, this is misposting only in the SL. However, the customers' ledger should be adjusted.

9)

Yesterday Corp None, this is misposting only in the SL. However, the customers' ledger should be adjusted.

Requirement No. 2 Unadjusted balance Add (Deduct) adjustments: No. 1 No. 4 No. 5 No. 6 Adjusted balance

2,020,000 (92,000) (40,000) (160,000) (124,000) 1,604,000

PROBLEM NO. 3 - Praktis Company Accounts receivable

Per Books 442,500

60 days old and below

238,500

61 to 90 days Over 90 days

117,200 85,400

Allowance for doubtful accounts

Adjusting Journal Entries 1 Advances to officers and employees Accounts receivable

15,000

Adjustments (16,400) 15,000 (21,000) (12,000) (1,200) (18,000) (1,500)

Per Audit 387,400

4 5 6 7

(12,000) (1,200) (18,000) (1,500)

205,800

3

(21,000)

2 3 8

15,000 (21,000) (1,378)

16,400 16,400

2 Accounts receivable Allowance for doubtful accounts Erroneous recording of recovery from written off account

15,000

3 Allowance for doubtful accounts Accounts receivable (>90 days) Accounts that should be written off

21,000

4 Net sales Accounts receivable (