NFJPIA MOCK BOARD2014AUDITING PROBLEMSUse The Following
NFJPIA MOCK BOARD2014
AUDITING PROBLEMS
Use the following information for the next two items
GIL Company’s December 31 year-end financial statements contained the following errors
December 31, 2013
December 31, 2014
Ending inventory
P91,000 overstated
P61,000 understated
Accounts payable
P54,000 understated
P62,000 overstated
Depreciation expense
P23,000 understated
-
An insurance premium covering years 2013, 2014 and 2015 amounting to P135,000 was prepaid and expensed in full in 2013. Increase in fair value on FVOCI investment amounting to P52,000 and P38,790 for 2013 and 2014, respectively, were included in profit or loss.
1. What is the under/overstatement of GIL’s assets as of December 31, 2013 due to the errors?
a. P24,000 over
b. P69,000 over
c. P1,000 over
d. P114,000 over
2. What is the under/overstatement of GIL’s working capital as of December 31, 2013 due to the errors?
a. P100,000 under
b. P100,000 over
c. P55,000 under
d. P55,000 over
Use the following information for the next five items
Cloud Nine Corporation manufactures and sells food products and food processing machinery. Its balance sheet date is December 31. Relevant extracts from its financial statements at December 31, 2013 are as follows:
Current liabilities
Provision
Provision for warranties P270,000
Noncurrent liabilities
Provision
Provision for warranties 180,000
Note 36 - Contingent Liabilities
Cloud Nine is engaged in litigation with various parties in relation to allergic reactions to traces of peanuts alleged to have been found in packet of fruit gums. Cloud Nine strenuously denies the allegations and, as at the date of authorizing the financial statements for issue, is unable to estimate the financial effect, if any, of any costs or damages that may be payable to the plaintiffs.
The provision for warranties at December 31, 2013 was calculated using the following assumptions: There was no balance carried forward from the prior year.
Estimated cost of repairs
AUDITING PROBLEMS
Use the following information for the next two items
GIL Company’s December 31 year-end financial statements contained the following errors
December 31, 2013
December 31, 2014
Ending inventory
P91,000 overstated
P61,000 understated
Accounts payable
P54,000 understated
P62,000 overstated
Depreciation expense
P23,000 understated
-
An insurance premium covering years 2013, 2014 and 2015 amounting to P135,000 was prepaid and expensed in full in 2013. Increase in fair value on FVOCI investment amounting to P52,000 and P38,790 for 2013 and 2014, respectively, were included in profit or loss.
1. What is the under/overstatement of GIL’s assets as of December 31, 2013 due to the errors?
a. P24,000 over
b. P69,000 over
c. P1,000 over
d. P114,000 over
2. What is the under/overstatement of GIL’s working capital as of December 31, 2013 due to the errors?
a. P100,000 under
b. P100,000 over
c. P55,000 under
d. P55,000 over
Use the following information for the next five items
Cloud Nine Corporation manufactures and sells food products and food processing machinery. Its balance sheet date is December 31. Relevant extracts from its financial statements at December 31, 2013 are as follows:
Current liabilities
Provision
Provision for warranties P270,000
Noncurrent liabilities
Provision
Provision for warranties 180,000
Note 36 - Contingent Liabilities
Cloud Nine is engaged in litigation with various parties in relation to allergic reactions to traces of peanuts alleged to have been found in packet of fruit gums. Cloud Nine strenuously denies the allegations and, as at the date of authorizing the financial statements for issue, is unable to estimate the financial effect, if any, of any costs or damages that may be payable to the plaintiffs.
The provision for warranties at December 31, 2013 was calculated using the following assumptions: There was no balance carried forward from the prior year.
Estimated cost of repairs