eview of the voucher register disclosed the following: Raw materials costing Php30,000 shipped by the supplier...
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eview of the voucher register disclosed the following: Raw materials costing Php30,000 shipped by the supplier on May 4,2017 (at which time title passed to the company) were received only on June 22, 2017. The invoice was recorded in the May 2015 voucher register, but the goods were not included in the May 31, 2017 physical inventory. Invoices for raw materials totaling Php 27,000 which were physically counted at May 31,2015 were recorded in June 2017 voucher register. Certain raw materials invoiced in May at Php18,000 were received and recorded in June 2017. Title to the goods, however, passed to the company in May 2017. Recorded in June, 2017 sales journal were invoices dated May 28 & 29, 2017 with a total value of Php19,000. The goods were shipped on said dates and title passes immediately to the customers. Cost of the sales amounted to Php14,000. None of the goods were included in the physical count. On May 3, 2017, the Company shipped finished goods on consignment to CALEB Manufacturing. The goods (having equal unit costs) had material and labor costs of Ph18,000 and Php5,000, respectively. Shipping cost of Php1,500 were charged to selling expenses (not considered in the adjustment data as previously described). The controller of CALEB notified LUKE on June 17,2017 that 1/3 of the inventory had been sold (for Php11,000, net of commission) as at June 31,2017. Consigned goods were also not included in the physical count. A comparison of inventory cost with net realizable value revealed that finished goods prices have substantially appreciated and therefore, it is reasonable to value inventories at cost. Prepare Audit Working Paper for adjusting journal entries supported by computations in good form. accounting that you work for has been engaged to audit the books and accounts of LUKE Manufacturing Corporation for the fiscal year ended May 31,2017. You have been designated staff-in-charge of the engagement. In the course of your examinations of the inventory accounts and records, you noted the following information: Subsidiary ledgers support general ledger control accounts maintained for manufacturing overhead, selling expense, and general & administrative expenses. The total of the subsidiary ledger balances are reconciled monthly with the corresponding balance of the general ledger control account. An analysis of detail charges disclosed errors in account classifications that indicate a need to decrease manufacturing overhead by P300,000, and increase selling expenses and general & administrative expenses by P85,000and P215,000, respectively. Inventories are priced at lower of cost (1st in, 1st out method) or net realizable value. A complete physical inventory was taken on May 31,2017 and inventory items priced on the FIFO basis. Inventory accounts were adjusted to physical quantities and prices at May 31,2017. No test had been made comparing inventory cost to NRV. Details of inventory accounts as adjusted at May 31,2017 as follows: Inventories Materials Direct labor Applied overhead Amount Raw materials Work-in-process # 395,000 0 0 395,000 425,000 315,000 38,000 28,500 543,000 403,000 Finished goods 80,000 60,000 All inventories on hand at May 31,2016 had been sold. At the end of each month, overhead is charged to work-in-process crediting applied factory overhead based on direct labor cost at an estimated rate of 47.5%. The unadjusted balance for manufacturing overhead and applied manufacturing overhead at May 31,2017 were Php1 million and P950,000, respectively. Direct labor charges during the fiscal year amounted to two million pesos. Prepare Audit Working Paper for adjusting journal entries supported by computations in good form. Ref Accounts AUDIT WORKING PAPER Dr Cr eview of the voucher register disclosed the following: Raw materials costing Php30,000 shipped by the supplier on May 4,2017 (at which time title passed to the company) were received only on June 22, 2017. The invoice was recorded in the May 2015 voucher register, but the goods were not included in the May 31, 2017 physical inventory. Invoices for raw materials totaling Php 27,000 which were physically counted at May 31,2015 were recorded in June 2017 voucher register. Certain raw materials invoiced in May at Php18,000 were received and recorded in June 2017. Title to the goods, however, passed to the company in May 2017. Recorded in June, 2017 sales journal were invoices dated May 28 & 29, 2017 with a total value of Php19,000. The goods were shipped on said dates and title passes immediately to the customers. Cost of the sales amounted to Php14,000. None of the goods were included in the physical count. On May 3, 2017, the Company shipped finished goods on consignment to CALEB Manufacturing. The goods (having equal unit costs) had material and labor costs of Ph18,000 and Php5,000, respectively. Shipping cost of Php1,500 were charged to selling expenses (not considered in the adjustment data as previously described). The controller of CALEB notified LUKE on June 17,2017 that 1/3 of the inventory had been sold (for Php11,000, net of commission) as at June 31,2017. Consigned goods were also not included in the physical count. A comparison of inventory cost with net realizable value revealed that finished goods prices have substantially appreciated and therefore, it is reasonable to value inventories at cost. Prepare Audit Working Paper for adjusting journal entries supported by computations in good form. accounting that you work for has been engaged to audit the books and accounts of LUKE Manufacturing Corporation for the fiscal year ended May 31,2017. You have been designated staff-in-charge of the engagement. In the course of your examinations of the inventory accounts and records, you noted the following information: Subsidiary ledgers support general ledger control accounts maintained for manufacturing overhead, selling expense, and general & administrative expenses. The total of the subsidiary ledger balances are reconciled monthly with the corresponding balance of the general ledger control account. An analysis of detail charges disclosed errors in account classifications that indicate a need to decrease manufacturing overhead by P300,000, and increase selling expenses and general & administrative expenses by P85,000and P215,000, respectively. Inventories are priced at lower of cost (1st in, 1st out method) or net realizable value. A complete physical inventory was taken on May 31,2017 and inventory items priced on the FIFO basis. Inventory accounts were adjusted to physical quantities and prices at May 31,2017. No test had been made comparing inventory cost to NRV. Details of inventory accounts as adjusted at May 31,2017 as follows: Inventories Materials Direct labor Applied overhead Amount Raw materials Work-in-process # 395,000 0 0 395,000 425,000 315,000 38,000 28,500 543,000 403,000 Finished goods 80,000 60,000 All inventories on hand at May 31,2016 had been sold. At the end of each month, overhead is charged to work-in-process crediting applied factory overhead based on direct labor cost at an estimated rate of 47.5%. The unadjusted balance for manufacturing overhead and applied manufacturing overhead at May 31,2017 were Php1 million and P950,000, respectively. Direct labor charges during the fiscal year amounted to two million pesos. Prepare Audit Working Paper for adjusting journal entries supported by computations in good form. Ref Accounts AUDIT WORKING PAPER Dr Cr
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Related Book For
Intermediate Accounting
ISBN: 978-0176509736
10th Canadian Edition, Volume 1
Authors: Donald Kieso, Jerry Weygandt, Terry Warfield, Nicola Young,
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