You have been assigned to audit the financial statement MALAQUI INCORPORATED. The company is a distributor of a variety of electronic appliances and parts. The company uses the calendar year for reporting purposes. Information regarding balances of MALAQUI INCORPORATED'S Accounts Receivable and the related Allowance for Doubtful Accounts as of December 31, 2021 and the related audit finding, is given below. The schedule of accounts receivable furnished you by the accountant reflects some errors. The total figure in the schedule does not tally with the balance per subsidiary ledger of P919,000. Based on your review of sales invoices, purchase orders and other related documents, you noted the following information: a. Sales on account of various electronics totaling P36,480 were returned by the customer on December 28, 2021, but no entry was made in the books. The goods were included in the year-end physical count. b. Based on the findings per confirmation reply from a customer, he indicated that he has already paid his account of P23,980 in October, 2021. Your verification disclosed that said collection was credited to net sales account. c. Collection of P12,950 on November 5, 2021 from Diana Corporation was credited to the account of DNA Corporation. The allowance for doubtful accounts is set at 3% of the outstanding accounts receivable at the end of the period. As of December 31, 2021, the Allowance for Doubtful Accounts has a balance of P32,400 before adjustment.
You have been assigned to audit the financial statement MALAQUI INCORPORATED. The company is a distributor of a variety of electronic appliances and parts. The company uses the calendar year for reporting purposes. Information regarding balances of MALAQUI INCORPORATED'S Accounts Receivable and the related Allowance for Doubtful Accounts as of December 31, 2021 and the related audit finding, is given below. The schedule of accounts receivable furnished you by the accountant reflects some errors. The total figure in the schedule does not tally with the balance per subsidiary ledger of P919,000. Based on your review of sales invoices, purchase orders and other related documents, you noted the following information: a. Sales on account of various electronics totaling P36,480 were returned by the customer on December 28, 2021, but no entry was made in the books. The goods were included in the year-end physical count. b. Based on the findings per confirmation reply from a customer, he indicated that he has already paid his account of P23,980 in October, 2021. Your verification disclosed that said collection was credited to net sales account. c. Collection of P12,950 on November 5, 2021 from Diana Corporation was credited to the account of DNA Corporation. The allowance for doubtful accounts is set at 3% of the outstanding accounts receivable at the end of the period. As of December 31, 2021, the Allowance for Doubtful Accounts has a balance of P32,400 before adjustment.
Auditing: A Risk Based-Approach (MindTap Course List)
11th Edition
ISBN:9781337619455
Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg
Publisher:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg
Chapter9: Auditing The Revenue Cycle.
Section: Chapter Questions
Problem 37RQSC
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At the end of the accounting period, a financial statement is prepared by every company, then at that time while preparing the financial statement, the company determines among its total receivable amount how much portion of receivables is collected by the company during that accounting period.
Accounts Receivable
The word “account receivable” means the payment is yet to be made for the work that is already done. Generally, each and every business sells its goods and services either in cash or in credit. So, when the goods are sold on credit account receivable arise which means the company is going to get the payment from its customer to whom the goods are sold on credit. Usually, the credit period may be for a very short period of time and in some rare cases it takes a year.
Question
What is the adjusted balance of Accounts Receivable as of December 31, 2021?
895,020
919,000
882,520
858,540
Transcribed Image Text:You have been assigned to audit the financial statement MALAQUI INCORPORATED. The company is a distributor of a
variety of electronic appliances and parts. The company uses the calendar year for reporting purposes. Information
regarding balances of MALAQUI INCORPORATED'S Accounts Receivable and the related Allowance for Doubtful Accounts
as of December 31, 2021 and the related audit finding, is given below.
The schedule of accounts receivable furnished you by the accountant reflects some errors. The total figure in the schedule
does not tally with the balance per subsidiary ledger of P919,000. Based on your review of sales invoices, purchase orders
and other related documents, you noted the following information:
a. Sales on account of various electronics totaling P36,480 were returned by the customer on December 28, 2021, but no
entry was made in the books. The goods were included in the year-end physical count.
b. Based on the findings per confirmation reply from a customer, he indicated that he has already paid his account of
P23,980 in October, 2021. Your verification disclosed that said collection was credited to net sales account.
c. Collection of P12,950 on November 5, 2021 from Diana Corporation was credited to the account of DNA Corporation.
The allowance for doubtful accounts is set at 3% of the outstanding accounts receivable at the end of the period. As of
December 31, 2021, the Allowance for Doubtful Accounts has a balance of P32,400 before adjustment.
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