Excel Professional Services, Inc. Management Firm of Professional Review and Training Center {f 7 See] Manila * Cavite * Laguna * ckBR¥@hgayan De Oro * Dace Sines 977 auprrine 1ST ASSESSMENT EXAM CPA Multiple Choice. Select the letter that: best answer. This examination Consists of 70 items only. Beleve on what JBN bear on your mind that you ean answer everything tothe best that you can. Always observe HONESTY: Geet rest 1. Which of the following is an example of subjective evidence? 2. A positive confirmation of an account receivable b. A bank confirmation F Tyatitles ofthe credit manager about the collectibilty of noncurrent accounts receivable ‘The physical count of securities and cash 2- To quantify the risk that the sample evidence leads to erroneous conclusions about the sampled population 2; Each item in the sampled population must have an equal chance of being selected. ». Each item in the sampled population must have a chance of bel sere eos Proportional to its book value. Each item in the sampled population must have an equal or known probability of being selected. @. The precise number of items in the population must be known, 3 Other factors remaining constant, the audit risk is increased by an increase in a. Materiality, b. The effectiveness of analytical procedures. . The risk of incorrect rejection, 4.) Detection risk. 4 Which ofthe following isa valid statement about the assessment of control risk? 2 There is @ positive relationship between detection risk ond the combined level of inherent and control risk. b, Misstatements discovered by conducting substantive procedures ‘may cause the auditor to modify the previous assessment of control risk. © Fete Suslter should consider the assessed levels of inherent and control risks in Girermining the nature, timing, and extent of substantive procecucce required to eliminate audit risk, The assessed level of inherent and control risks can be sufficiently low in order to liminate the aueitor’s need to perform substantive tests on some meetin 5. The mean-per-unit estimation method calculates the estimated total audited value of a Population of accounts receivable as: J 8) qpammation of the total individual accounts values in the population. & TRE sample mean aucited value mutiplied by the number of horse the Population. & The estimated total aucited value of the population muttiped by ene umber of items in the sample. @ The summation of the sample multiplied by the number of diserete samples in the Population. & Which of the following control procedures will ikely prevent the concealment of a cash Shortage that was perpetrated by improperly writing off a trade secon receivable? 2) Write off must be approved by a responsible officer after reviewing the credit department's recommendations and supporting evidence, Page 1 of 16 www. teamprte.com.ph& b. Write off must be supported by an aging schedule showing that only receivables that are several months overdue have been written off. c. Write off must be approved by the cashier. . Write off must be authorized by field sales representatives. 7. Which of these assignments of duties would least likely lead to an embezzlement or theft? a. Inventory warehouse manager has responsibility for making the physical inventory observation and reconciling the discrepancies to the perpetual inventory records. b. The cashier prepares the bank deposit, endorses the checks with a company stamp, takes the cash and checks to the bank for deposit, and reconciles the bank statement. c. Accounts receivable clerk opens customer payments so he could make entries in the customers’ accounts receivable subsidiary accounts. 1d. Financial vice president receives the checks payable to suppliers and the supporting Invoices, signs the checks, and mails them to the payees. 8. A company has a policy of rotating employees’ assigned duties. This policy is most important for employees who: a. are not bonded. b. maintain the detailed accounting records. .) handle cash receipts, d. have access to the general ledger. 9. While performing an audit of cash, an auditor begins to suspect kiting. Which of the following is the best evidence that the auditor could obtain concerning whether kiting is taking place? a. Documentary evidence obtained by vouching entries in the cash account to supporting documents. b. Documentary evidence obtained by vouching credits on the latest bank statement to supporting documents. (c.) Evidence obtained by preparing a schedule of interbank transfers. d. Oral evidence obtained through discussions with controller personnel. 10. Before applying principal substantive tests to the details of asset and liability accounts at an interim date, the auditor should 4.) assess the difficulty in controlling incremental audit risk. b. investigate significant fluctuations that have occurred in the asset and liability accounts since the previous balance sheet date. . select only those accounts which can effectively be sampled during year-end audit work. 4. consider the control tests that must be applied at balance sheet date to extend the audit Conclusions reached at the interim date. 11. Which of the following is a proper alternative audit procedure for no responses to positive accounts receivable confirmation requests? ‘2. Examination of subsequent cash receipts in payment of the receivable. 'b. Mailing of negative confirmation requests to non-respondents. c. Expansion of the sample by the number of non-respondents. d. Reduction of accounts receivable by the amount of the no responses. 12. Which of the following matters do auditors need not communicate to the audit committee of a public company? a. All critical accounting policies b. Compensation arrangements related to the chief executive officer . Schedule of unadjusted differences Page 2 of 16 www.teamprte.com.ph#EL PROFESSIONAL SERVICES, INC. d. Management letter comments 13, Which ofthe following is not one ofthe primary approaches that the auditors may use when ‘evaluating the reasonableness of accounting estimates? ey peview and test management's process of developing estimates. b) Confirm estimates directly with outsiders. O aeetndently develop an estimate of the amount to be compared to management's estimate. 4, Review subsequent events or transactions that have bearing on the estimate, 14, The auditor's formal review of subsequent events normally should be extended through the date of the ‘a, auditor's report. B. next formal interim financial statements. ¢. delivery of the audit report to the client. 4. mailing of the financial statements to the stockholders. 415. performing inquiry and analytical procedures that provide the accountant with a reasonabi¢ cee rr ccpressing limited assurance that there are no material modifications that shout Pas tot to the financial statements in order for them to be in conformity with PFRS or with other comprehensive basis of accounting Is the definition of a. compilation. b. audit. .) review. d. agreed-upon procedure. 16. The primary purpose of an independent audit of financial statements is to ‘a. provide a basis for assessing management's performance. b. comply with laws and regulations. b. compl management that the financial statements are unbiased and free from material misstatements. @ provide users with an unbiased opinion about the faimess of information presented in the ” financial statements. 47. An audit which is undertaken in order to determine whether the auditee Is following Specific procedures or rules lad down by some higher authority ts classified as a(n) ‘4, audit of financial statements. ‘compliance audit. operational audit. production audit. 18. Inperforming a financial statement audit, which of the following would an aud likely consider? Internal control. ‘Compliance with GAAP. Quality of managements’ business decisions. Fairness of the financial statement amounts. anges 19, The term professional accountant in public practice includes the following, except: ‘A sole proprietor providing professional services to a client. Faun partner oF person occupying a position similar to that of partner staff in @ practice providing professional services to a client. Page 3 of 16 steamy IEXCEL PROFESSIONAL SERVICES, INC. (© Professional accountants employed in the Public sector having managerial — “responsibilities 4. A firm of professional accountants in public practice. 20... In forming an opinion on the financial statements, ‘2 fhe auditor should evaluate the conclusions drawn from the audit evidence obtained during the course of the audit b. fhe auditor evaluates whether there is a reasonable assurance about whether the financial statements are free from any misstatements, & fhe aualtor evaluates whether sufiiently appropriate audit evidence has been obtained to eliminate the risk of material misstatements & "he aucltor verifies that all errors that misstate the financial statements have been corrected by the client 21. _ Management's responsibility for the financial statements is 2. Implicitly represented in the independent auditor's report. b. Pxplktly represented in the basis for opinion paragraph of the independent auditor's report. ©) (apliity represented in the scope ~ responsibilty of the management paragraph of the independent auditor's report. 4 Explicitly represented in the opinion paragraph of the auditor's standard report 22. ait determining the items that the auditor shall consider as key audit matters, the auditor takes into account (choose the incorrect one): 2 Breas which were considered to be susceptible to higher risks of material misstatement Srwhich where deemed to be ‘significant risks’ in accordance with PSA S12” >. S{aniicant auditor judgments in relation to areas of the financial statements that involved significant management judgment. & fhe effect on the audit of significant events or transactions that have taken place during the period, + Those that refers to a matter other than those presented or disclosed in the financial sd treats Jn the auditor’s judgment, is relevant to user's understanding of te audit, the auditor's responsibilities or the auditor's report. 23; it extreme cases such as situations involving multiple uncertainties that are significant te the financial statements, the auditor 3) may consider to express a disclaimer of opinion . may qualify his opinion instead of issuing an unqualified opinion with emphasis of matter paragraph C. May issue an adverse opinion because of their significance 4. may issue a “subject to” opinion because the situations related to uncertainties 24, yf explanatory paragraph or modified wordings may be added to the audit report while at the same time issuing an unqualified opinion in all cases except whe & {he client has changed an accounting principle with the agreement of the auditor. b. Mere isan Immaterial departure from PFRS to ensure flr piesertaten sth the agreement of the auditor. . the audit opinion is partly based on the work of another auditor. 4) the audit work has been materially limited by management, 25: If an amendment is necessary in the other information and the entity refuses to make the Fallomne: othe 2uditor, depending on particular circumstance, may do sny of the following, except: Page 4 of 16 www.teamprtc.com.phEL PROFESSIONAL SERVICES, INC, ‘a. Describe the material inconsistency as an emphasis of matter in a paragraph following the opinion paragraph. b. The auditor may not issue the auditor’s report. cc. The auditor may withdraw from the engagement. ) The auditor to issue either a qualified or adverse opinion. 26. Which of the following statements is Incorrect regarding obtaining an understanding of the entity and its environment? 3. Obtaining an understanding of the entity and its environment is an essential aspect of performing an audit in accordance with PSAS. b, Understanding of the entity and its environment establishes a frame of reference within which the auditor plans the audit and exercises professional judgment about assessing risks of material misstatement in the financial statements and responding to those risks throughout the audit. c. The auditor's primary consideration Is whether the understanding that has been obtained Is sufficient to assess the risks of material misstatement in the financial Statements and to design and perform further audit procedures. The depth of the overall understanding that is required by the auditor in performing the ‘audit is at least equal to that possessed by management in managing the entity. 27. Why should the auditor plan more work on individual accounts as lower acceptable levels: of both audit risk and materiality are established? a) To find smaller errors b. To find larger errors . To increase the tolerable error in the accounts 4d. To decrease the risk of overreliance 28. Analytical procedures performed in the planning stage of an audit suggest that several ‘accounts have unexpected relationships. The results of these procedures most likely would indicate that: 2. Irregularities exist among the relevant account balances. (6) Adaitional tests of details are required. @ Internal control activities are not operating effectively. 4. The communication with the audit committee should be revised 29. An effective internal control is not expected to provide a reasonable assurance regarding the achievement of objectives concerning a. reliability of financial reporting. _b. compliance to applicable laws and regulations. (c) elimination of material misstatements. d. effectiveness and efficiency of operations. 30. Which of the following is the auditor's purpose of further testing the internal control dures? (a) Provide a basis for reducing the assessed level of control risk. b, Reduce the risk that error or fraud that has not been prevented or detected by the internal control system is not detected by the independent audit. . Provide assurance that transactions are executed in accordance with management's ‘authorization and access to assets is limited by a segregation of functions. 4d, Provide assurance that transactions are recorded as necessary to permit the preparation of the financial statements in conformity with PFRS. Page 5 of 16 ‘www.teamprtc.com.ph(CEL PROFESSIONAL SERVICES, INC. 31. Which of the following procedures most likely would be included as part of an auditor's tests of control procedures? ‘a, Inspection °B. Reconciliation c. Confirmation . Analytical procedures 32. Which of the following statements best describes a weakness often associated with computers? a. Computer equipment is more subject to a systems error than manual processing is subject to human error. b. Computer equipment processes and records similar transactions in a similar manner. . Control activities for detecting invalid and unusual transactions are less effective than manual control activities. (d. Functions that would normally be separated in a manual system are combined in 2 computer system. 33. A partial set of standard characteristics of a real-time system is ‘a. batched input, on-line files, and an extensive communication network. b. reliance upon sequential files, prompt input from users, and interactive programs. .) on-line files, prompt input users, and an extensive communication network. d. the use of high-level language and the major need being for historical reports. 34. Which of the foliowing characteristics Is most important in assuring the achievement of the primary purpose of working papers? @. Working papers must be of standard format and standard content. b. Working papers must be properly indexed and cross-referenced to the draft of audit report. Working papers must provide sufficient, competent, and useful information to support the audit report. d. Working papers must be arranged in logical order following the audit program sequence. 35. Which of the following statements about the competence of evidence Is not correct? a, To be competent, an evidence must be beth valid and relevant. 'b.) Competence can be improved by selecting a larger sample size. ‘6: Competence can be improved by selecting audit procedures that contain a higher quality Of the characteristics sought. 4. Competence cannot be improved by selecting different population items to include in the sample size. PROBLEM NO.1 You were engaged by Asingan Corporation for the audit of the company's financial statements for the year ended December 31, 2023. The company is engaged in the wholesale business and makes all sales at 25% over cost. The following were gathered from the client's accounting records: SALES RCHASES Date Reference Amount Date Reference Amount Balance forwarded 7,800,000 Balance forwarded 4,200,000 12/27 ‘SI No, 865 60,000, 12/28 RR #2059 36,000 Page 6 of 16 ‘Www.teamprtc.com.ph =EL PROFESSIONAL SERVICES, INC. 12/28 | SINo. 866 225,000 12/30 RR #2061 105,000 12/28 SINo. 867 15,000 12/31 RR #2062 63,000 12/31 SINo. 869 69,000 12/31 RR #2063 96,000 12/31 SINo. 870 102,000 12/31 Closing entry (4,500,000) 12/31 SINo. 871 24,000 pase 12/31 Closing entry (8,295,000) cis Note: SI = Sales Invoice RR = Receiving Report Accounts receivable 750,000 Inventory 900,000 Accounts payable 600,000 ‘You observed the physical inventory of goods in the warehouse on December 31 and were satisfied that it was properly taken. when performing sales and purchases cut-off tests, you found that at December 31, the last Receiving Report which had been used was No. 2063 and that no shipments had been made fon any Sales Invoices whose number Is larger than No. 868. You also obtained the following additional information a) Included in the warehouse physical inventory at December 31 were goods which had been purchased and received on Receiving Report No. 2060 but for which the invoice was not received until the following year. Cost was P27,000, b) On the evening of December 31, there were two trucks outside of the company's warehouse: = Truck No. XXX 888 was unloaded on January 2 of the following year and received on Receiving Report No. 2063. The freight was paid by the vendor. ‘+ Truck No. MGM 357 was loaded and sealed on December 31 but leave the company premises on January 2. This order was sold for P150,000 per Sales Invoice No. 868. ) Temporarily stranded at December 31 were two delivery trucks en route to ABC Trading Corporation. ABC received the goods, which were sold on Sales Invoice No. 866 terms FOB Destination, the next day. 4) En route to the client on December 31 was a truckload of goods, which was received on Receiving Report No. 2064. The goods were shipped FOB Destination, and freight of P2,000 ‘was paid by the client. However, the freight was deducted from the purchase price of 800,000. QUESTIONS: Based on the given information and the result of your audit, determine the following: | 36.Sales for the year ended December 31, 2023 ! 2. P8,100,000 ©) P7,875,000 b. 8,025,000 & P7,725,000 | 37.Purchases for the year ended December 31, 2023 ‘a. P4,500,000 €. P5,631,000 bb.) P4,527,000 4. P5,727,000 Page 7 of 16(CEL PROFESSIONAL SERVICES, IN‘ 38.Accounts receivable as of December 31, 2023 a, 180,000 c. P525,000 330,000 d. P555,000 39.Inventory as of December 31, 2023 a. P1,200,000 ©) P1,296,000 b. P1,221,000 “G. P1,452,000 40.Accounts payable as of December 31, 2023 ‘a. 531,000 © P “27,000 b. P600,000 d. 1,827,000 PROBLEM NO.2 ‘Your new audit client, Guimba Company, prepared the trial balance below as of December 31, 2023. The company started its operations on January 1, 2022. Your examination resulted if the necessity of applying the adjusting entries indicated in the additional data below. Guimba Company Trial Balance December 31, 2022 Debits Credits Cash 510,000 Accounts receivable - net 600,000 Inventories, December 31, 2022 669,000 Land 660,000 Buildings 990,000 ‘Accumulated depreciation, building P19,800 Machinery 444,000 Accumulated depreciation, machinery 45,000 Sinking fund assets 75,000 Bond discount 75,000 Treasury shares 105,000 ‘Accounts payable 567,000 Accrued bond interest 11,250 First mortgage, 6% sinking fund bonds 679,500, Share capital 1,500,000 Share premium 150,000 Donated shares 180,000 Retained earnings, December 31, 2022 222,450, Net sales 2,625,000 Purchases Salaries and wages Factory operating expenses ‘Administrative expenses Bond interest 45,000 Additional data are as follows: (1) The 1,500,000 share capital was issued at a 10 percent premium to the owners of the land and buildings on December 31, 2021, the date of organization, Shares with a par value of 180,000 were donated back by the vendors. The following entry was made: Page 8 of 16 weww teamprtc.com.phEXCEL PROFESSIONAL SERVICES, INC. Treasury shares 180,000 Donated shares 180,000 ‘The shares were donated because the proceeds from its subsequent sale were to be considered as an allowance on the purchase price of land and buildings in proportion to their values as first recorded. The treasury shares were sold in 2023 for P75,000, which was credited to Treasury shares, (2)On December 31, 2023, a machine costing P15,000 when the business started was removed. The machine had been depreciated at 10 percent during the first year. The only entry made was one crediting the Machinery account with its sales price of P6,000. (3)Depreciation is to be provided on the straight-line basis, as follows: buildings, 2 percent of cost; machinery, 10 percent of cost. Ignore residual values. QUESTIONS: Based on the given information and the result of your audit, you are to provide the answers to the following: 41.The correct balance of Land account as of December 31, 2023 is Pee 0 (e: P630,000 b. P588,000 d. P660,000 42.The adjusted carrying amount of Building as of December 31. 2023 is ‘a. P905,400 ©. P945,000 (5) 907,200 @. 950,400 43:The adjusted carrying amount of Machinery as of December 31, 2023 is 2. P345,000 . P354,000 ‘b) P348,000 d. P399,000 44.The adjusted depreciation expense for 2023 Is 2a. 62,400 Ce) P63,900 b. 63,000 a. 64,800 45.Hlow much is the gain or loss on sale of machinery on December 31, 20237 2) "P6,000 loss c. P7,500 loss °b. P6,000 gain d. P7,500 gain PROBLEM NO.3 The following transactions appear on the Investment in Paniqui account of Tarlac Corporation: Date Particulars Debit Credit 01/02/22 Purchased 10,000 shares 2,000,000 12/31/22 Purchased 15,000 shares 3,180,000 (04/30/24 Sold 12,500 shares @ P231 2,887,500 Your audit revealed the following additional information: + On January 2;°2022, Tarlac, Inc. acquired 2 10% interest in Paniqui Corp. by paying 2,000,000 for 10,000 ordinary shares. Page 9 of 16 www.teamprtc.com.phEL PROFESSIONAL SERVICES, INC. On December 31, 2022, Tarlac paid P3,180,000 for 15,000 additional ordinary shares of Paniqui, which represents @ 15% interest in Paniqui. Tarlac Corp.'s accounting manual requires the use of ‘fair value as deemed cost approach’ to account for step acquisitions. ‘+ The acquisitions on January 2 and December 31 were made at prices proportionate to the value assigned to Paniqui’s net assets, which equaled their carrying amounts. ‘+ Tarlac uses the average method in recording disposals of its investments. ‘+ From Paniqui’s financial statements, you were able to obtain the following information: 2022 2023 2024 Profit 2,000,000 3,000,000 1,500,000 Dividends paid on July 1 1,000,000 1,500,000 600,000 * Closing market quotations for the shares of Paniqui: December 31, 2021 p2i2 December 31, 2022 216 December 31, 2023 220 QUESTIONS: Based on the given information and the result of your audit, answer the following: 46.The total amount that should be recognized in 2022 profit or loss is ‘a. 100,000 ,” 220,000 | b. 200,000 d. 250,000 47.The carrying amount of the investment in Paniqul as of December 31, 2022 is understated by a. 100,000 <. P220,000 (b) 120,000 . 370,000 48.The carrying amount of the investment in Paniqui as of December 31, 2023 should be ‘2; P5,655,000 €. P5,775,000 (b._P5,675,000 4. 5,925,000 49.Gain of loss on sale of investment in Paniqui on April 30, 2023 is ‘a. 2,500 loss (€)) P12,500 loss b. P3,125 gain d. P50,000 gain 50.The carrying amount of the investment in Paniqui as of December 31, 2024 should be a, 2,750,000 ©. P2,837,500 . 2,800,000 4. 3,025,000 PROBLEM NO.4 On January 1, 2018, Calauag Corporation issued a 10 per cent convertible bonds with a face value of P4,000,000 maturing on December 31, 2027. Each P1,000 bond is convertible into ordinary shares of Calauag at a conversion price of P25 per share, Interest is payable half- yearly in cash. At the date of issue, Calauag could have Issued nonconvertible debt with a ten- year term bearing a coupon interest rate of 11 per cent. Page 10 of 16 wwiw.teamprtc.com.phEL PROFESSIONAL SERVICES, INC. On January 1, 2023, the convertible bond has a fair value of P4,400,000. Calauag makes a tender offer to the holders to repurchase the bonds for P4,400,000, The holders of the: 2,000,000 bonds accepted the offer. At the date of repurchase, Calauag could have issued non-convertible debt with a five-year term bearing a coupon interest rate of 8 per cent. On December 31, 2023, to induce the holders of the remaining bonds to convert the bonds promptly, Calauag reduces the conversion price to P20 if the bonds are converted before Match 1, 2024 (le within 2 months). The market price of Calauag's ordinary shares on the date the terms are amended is P32 per share. Questions: Based on the above and the result of your audit, answer the followi value factors to 4 decimal places) (Round off present 51.The proceeds from issuance of convertible bonds to be allocated to the equity component is a. Nil Gp, P235,520 b. P136,760 id) 239,120 52.The carrying amount of the bonds on December 31, 2022 is a. P3,113,180 c. P3,885,940 b. P3,849,120 d. 4,000,000 '53.The amount to be recognized in profit or loss as a result of the repurchase of the bonds on January 1, 2023 is a. P180,400 &. 203,880 b. 200,000 d) 237,730 54.The repurchase of the bonds on January 1, 2023 decreased equity by a. Nil © P 76,630 (b) 37,710 d. 439,530 '55.The amount to be recognized in profit or loss as a result of the amendment of the terms on December 31, 2023 is a. Nil sc. P 64,000 b. P10,000 (4) P640,000 PROBLEM NO.5, You were able to gather the following information in connection with your audit of the equity section of the statement of financial position of Liloan, Inc. The company is a manufacturer of school and office equipment. As of December 31, 2022, the equity of the company is presented below: Share capital - preference, cumulative (P15 par value; 100,000 shares authorized, 12,000 shares issued and outstanding) P. 180,000 Ordinary share capital (P10 par value; 1,000,000 shares authorized, 330,000 shares issued and 3,300,000 outstanding) Retained earnings 1,866,000 5,346,000 Page 11 of 16 www.teamprtc.com.phEL PROFESSIONAL SERVICES, INC. iloan’s equity transactions during 2023 were as follows: 2, On January 31, 24,000 preference shares were issued in exchange for land with a fair value of P300,000. Six months ago, 2,000 shares of Liloan’s preference shares were exchanged “over the counter” for P14 per share. b. On February 14, 13,500 ordinary shares were sold to Ms. P. Saway at P25 per share. . On December 14, Liloan purchased dissident shareholder Saway's 13,500 shares at P27 per share. The shares are to be held as treasury shares. (Saway violently opposed Liloan’ business strategy and Liloan’s management decided to eliminate her interest.) 4. On December 20, Liloan contracted with Ms. Buti for the sale of 30,000 previously unissued ordinary shares at P25 per share to be issued when the purchase price is fully paid. At December 31, only P585,000 had been paid. Buti agreed to pay the balance on or before January 31, 2024. e. On December 31, Liloan retired 12,000 preference shares at P18 per share. f. A cash dividend of P2 per share was declared on the preference shares on October 15, and paid on November 15. 9. A cash dividend of P1.50 per ordinary share was deciared on December 15, and payable on January 15, 2024, hi. Liloan’s profit for the year 2023 was P750,000. QUESTIONS: Based on the above and the result of your audit, determine the follo 2023: 19 a5 of December 31, 56.Share capital - preference a. P264,000 c. P324,000 b. 300,000 4) 360,000 57,Share capital - ordinary (a) P3,435,000 ©. 3,735,000 b. P3,637,500 d. 4,020,000 58,Share premium a. P142,500 c. P592,500 b. 202,500 (@) P652,500 59.Total retained earnings : ‘a. P1,648,500 (@ 2,013,000 b. P1,977,000 4. P2,037,000 60.Total equity : a, P6,036,000 (©) P6,336,000 b. 6,171,000 d. 6,396,000 PROBLEM NO.6 Page 12 of 16 www.teamprtc.com.phPROFESSIONAL SERVICES, INC. Position amounts as of June 30, 2023. Current assets 2,440,500 Non-current assets 6,285,500 Current liabilities 1,386,000 Non-current liabilities 900,000 Owners’ equity 6,440,000 A review of account balances reveals the following data, (a)An analysis of current assets discloses the following: Cash P 422,500 Investment securities ~ trading 600,000 Trade accounts receivable 568,000 Inventories, including advertising supplies of P20,000 850,000 P2.440,500 (b) Non-current assets include the following: Property, plant and equipment: Depreciated book value (cost P6,560,000) 5,430,000 Deposit with a supplier for merchandise ordered for August delivery 21,500 Goodwill recorded on the books to cancel losses incurred by the company in prior years 774,000 26,285,500 (©) Current liabilities include the following Payroll payable P 71,500 ‘Taxes payable 41,500 Rent payable 114,000 ‘Trade accounts payable (net of P15,000, 6-month ote, received from a supplier who purchased some used equipment on June 29, 2023, 999,000 Notes payable 160,000 i.386,000 (4) Non-current liabilities include the following: 9% mortgage on property, plant, and equipment, payable in semiannual installment of P90,000 through to June 30, 2028 900,000 (e)Owners' equity includes the following Share capital - preference: 190,000 shares outstanding (P20 par value) 3,800,000 Share capital - Ordinary: 1,600,000 shares ‘at Pi par value 1,600,000 1e bookkeeper for Maguindanao Computers, Inc., reports the following statement of financial Page 13 of 16 www.teamprtc.com.ph_(CEL PROFESSIONAL SERVICES, INC. Share premium 1,040,000 6,440,000 (f) Ordinary shares were originally issued for P3,910,000, but the losses of the company for the past years were charged against share premium, QUESTIONS: Based on the given information and the result of the audit, determine the adjusted amounts of the following: 61.Current assets a. 2,435,500 &. P2,462,000 . P2/440,500 (a) P21477'000 62,Non-current assets (a. P5,490,000 c. P6,264,000 b. P5,511,500 d. P6,560,000 63.Current liabilities : 2. P1,401,000 ©) P1,581,000 b. 1,491,000 d. P1,602,500 64.Non-current liabilities a. P720,000 cc. P880,000 b. 810,000 d. 900,000 65.Equity (3. P5,666,000 . P7,740,000 b. P6,440,000 d. 8,750,000 PROBLEM NO.7 In connection with your audit of the Sinacaban Corporation for the year ended December 31, 2023, the following financial information were presented. Sinacaban Corporation Statements of Financial Position December 31, 2023 and 2022 2023 © 2022 Assets Cash and cash equivalents P 45,000 P 15,000 Accounts receivable 75,000 37,500 Inventory 30,000 22,500 Financial assets at FVTOCI 285,000 285,000 Page 14 of 16 www.teamprtc.com.ph_L PROFESSIONAL SERVICES, INC. Property, plant and equipment (net of accumulated depreciation of P75,000 and P90,000 as of December 34, 2023 and 2022, respectively) Intangible asset, net Total assets casi ‘Accounts payable Income taxes payable Deferred taxes payable Total liabilities Equity Share capital Retained earnings Total equity Total liabilities and equity 105,000 247,500 2355,000 630,000 P 75,000 187,500 30,000 15,000 45,000 __30,000 150,000 _ 232,500 97,500 97,500 307,500 _300,000 405,000 _397,500 P595,000 630,000 ‘Sinacaban Corporation Income Statement For the year ended December 31, 2023 Sales Cost of sales Gross profit ‘Administrative and selling expenses Interest expense Depreciation of property, plant and equipment ‘Amortization of intangible asset Dividend income Profit before income taxes Income tax expense Profit ‘Additional information: + The company pays salaries and other employee dues before the end of each month. Al ‘administration and selling expenses incurred were paid before December 31, 2023. ‘+ Dividend income comprised dividends received from financial assets at FVTOCI. This was Dividends received were classified under investing ret ived before December 31, 2023. 450,000 150,000) 300,000 (30,000) (30,000) (30,000) (7,500) 45,000 247,500 (60,000) 187.500 activities in last year’s statement of cash flows. ‘+ Equipment with a carrying amount P112,500 and cost of P157,500 was sold for P112,500. + The company declared and paid dividends of P180,000 to its shareholders during 2023. QUESTIONS: Page 15 of 16 www.teamprte.com.ph(CEL PROFESSIONAL SERVICES, INC. Based on the given information and the result of your audit, determine the following: 66.Cash collections from customers a. 367,500 c. P450,000 412,500 d. 487,500 67.Cash paid to suppliers and employees a. 270,000 ¢. P330,000 ‘6, 300,000 d. P450,000 68,Cash paid for income taxes 2, P30,000 . P75,000 b. 45,000 4. 90,000 ‘69.Net cash provided by operating activities a P 0 (ce P52,500 b. 37,500 4. 82/500 70.Net cash used in investing and financing activities 2, ian 52,500 b) P22,500 4. 67,500 @ endo Page 16 of 16 www.teamprtc.com.ph