123

Cash and Cash Equivalents The following table summarizes the cash receipts and disbursements of LOL Company for the last 6 months of 2016: onth #uly &ugust (eptember October  +o,ember "ecember

!eceipts $102%000 '0%000 120%000 1'2%000 260%000 2)0%000   *6 *6-%000

&dditional .nformation: 1/ an balance% #uly 1% 2016 2/ an alance% "ecember 1%2016 / Outstand Outstanding ing checs% checs% "ecember "ecember 1%2016 1%2016 4+o chec were outstanding on #uly 15 -/ ndeposit ndeposited ed receipts% receipts% "ecember "ecember 1% 2016 4.ncluded in the "ecember receipts5 3/ an deposits% #uly 1 through "ecember 1

"isbursements $60%000 110%000 6)%000 *2%000 122%000 1)0%000 66)%000

$200%000 32-%000 -2%000 -2%000 2-%000 2-%000 *1-%000

7hat is the total shortage8 a/ $0  b/ $'6%000 c/ $0%000 d. P66,000 oo alance% #uly 1 &dd Total boos receipts: Total Less Total disbursements &d9usted oo alance% "ecember 1

$ 200%000 1%00-%000 1%20-%000 62%000 $ 3'2%000

an alance% "ecember 1 &dd ndeposited receipts Total Less Outstanding Checs &d9usted an alance &d9usted oo alance Cash Shortage

$ 3'2%000 2-%000 3-)%000 -2%000 306%000 3'2%000 (66,000)

The auditor of LOL Company gathered the following information: 1/ 2/ / -/ 3/

The +o,ember 0 ban statement balance included the following ban ser,ice charges of $2%000/ The +o,ember 0 cash balance in the general ledger was $2--%300/ Outstanding checs on +o,ember 0 were $6%000 while undeposited receipts were $6%000/ The ban ser,ice charges as shown on the ban statement totaled $%000/ The "ecember 0 cash balance in the general ledger was $1*%'30% which recognized $-)2%'30 for "ecember receipts and $-03%300 for checs written during "ecember/ .n transit to the ban  were receipts of $2)%'30/ Checs of $13%000 written prior to "ecember and checs of $60%300 written in "ecember had not yet cleared the ban/

7hat is the total boo disbursements for "ecember8 a/  b/ c. d/

$-0%300 $-0-%300 P407,500 $-03%300

7hat is the +o,ember 0 an alance8 a/ $2'1%300 b. P6!,500 c/ $26)%300 d/ $266%300

alance per oos

 +o, 0

!eceipts

"isbursements

"ec 1

22-%300

-)2%'30

-0'%300

1*%'30

46%0005

6%000 42)%'305

42)%'305

ndeposited receipts  +o,/ 0 "ec/ 1 Outstanding Checs  +o,/ 0

6%000

6%000

"ec/ 1 an Charge

4'3%0005

'3%000

(er,ice

 +o,/ 0

42%0005

42%0005

"ec/ 1 alance per an

26*%300

-*0%000

Checs during "ecember  +o,ember ser,ice charge recorded in "ecember "otal #isburse$ents

%000

4%0005

*6%000

6%300 -03%300 2%000 407,500

our audit of the "ecember 1% 2013% financial statements of  Corporation re,eals the following: 1/ Current account at etroan $ 43%0005 2/ Current account at $+ 63%000 / Treasury bills 4ac;uired  months before maturity5 200%000 -/ Treasury bills 4maturity date is 12 430%0005 230%000 '0%000 4120%0005 100%000 > 200%000 $1%330%000

4100%0005 430%0005 > > > > 1'0%000 > $'10%000

> > 420%0005 4)0%0005 > > > > $-%630%000

4100%0005 430%0005 > > > > 1'0%000 > $2%20%000

100%000 > 4'0%0005 410%0005 4120%0005 100%000 41'0%0005 200%000 $3-0%000

&C Company engaged you to e?amine its boos and records for the fiscal year ended #une 0% 2016/ The companyAs accountant has furnished you not only the copy of trial balance as of #une 0% 2016 but also the copy of companyAs balance sheet and income statement as at said date/ The following data appears in the cost of goods sold section of the income statement: .n,entory% #uly 1% 2013 &dd $urchases Total goods a,ailable for sale Less .n,entory% #une 0% 2016 Cost of goods sold

$ 300%000   %600%000 -%100%000   '00%000 $%-00%000

The beginning and ending in,entories of the year were ascertained thru physical count e?cept that no reconciling items were considered/ @,en though the boos ha,e been closed% your woring paper trial  balance show all account with acti,ity during the year/ &ll purchases are =O shipping point/ The company is on a periodic in,entory basis/ .n your e?amination of in,entory cut>offs at the beginning and end of the year% you too note of the following: #uly 1% 2013 a/

#une in,oices totaling to $10%000 were entered in the ,oucher register in #une/ The corresponding goods not recei,ed until #uly/  b/ .n,oices totaling $3-%000 were entered in the ,oucher register in #uly but the goods recei,ed during #une/ #une 0% 2016 c/

.n,oices with an aggregate ,alue of $1)6%000 were entered in the ,oucher register in #uly% and the goods were recei,ed in #uly/ The in,oices% howe,er% were date #une/ d/ #une in,oices totaling $'-%000 were entered in the ,oucher register in #une but the goods were not recei,ed until #uly/ e/ .n,oices totaling $10)%000 4the corresponding goods for which were recei,ed in #une5 were entered the ,oucher register% #uly/

f/

(ales on account in the total amount of $1'6%000 were made on #une 0 and the goods deli,ered at that time/ oo entries relating to the sales were made in #une/

1/ Fow much is the ad9usted .n,entory as of #uly 1% 20138 a/ $300%000 c/ $3'6%000 b. P6'0,000 d/ $'0%000 2/ Fow much is the ad9usted $urchases for the fiscal year ended #une 0% 20168 c/ $%)*-%000 a. P',40,000  b/ $%600%000 d/ $%*1-%000 / Fow much is the ad9usted .n,entory as of #une 0% 20168 a/ $')-%000 c/ $)*2%000 d. P!60,000  b/ $300%000

nad9usted balances

.n,entory' > 260%000

$60%000

$%)-0%000

$*60%000

&d9ustments a  b c d e f Total

&d9usted balances

%nvest$ents 777 Company purchased $160 million of )D bonds% dated #anuary 1% on #anuary 1% 2016 to be held as financial assets at amortized cost/ On the ac;uisition date% the maret yield of bonds with similar ris and maturity was 10D/ The company paid $12 million for the price of the bonds/ .nterest is recei,ed on #une 0 and "ecember 1/ "ue to changes in maret conditions% the fair ,alue of the bonds at "ecember 1% 2016 was $1-0 million/

&t what amount will 777 Company report its in,estment in the "ecember 1% 2016 statement of financial position8 a/ $12/2 million  b/ 1-0 million

c. &'.4& $illion

d/ 160 million

The unrealized holding gain or loss to be classified as component of other comprehensi,e income at "ecember 1% 2016 is8 a/

$)/1 million holding gain

 b/ $)/* million holding loss c/

$'/3* million holding gain

d. P0

The amount of interest income to be reported in 777 CompanyAs income statement for the year ended "ecember % 2016 is8 a/

$6/- 

 b/ $12/)  c/

$6/61 

d. P&'.& 

"ate

.nterest !ecei,ed

.nterest .ncome

$rincipal

01