9. You have been appointed as auditor of Uy Inc. Its bookkeeper…
QuestionAnswered step-by-step9. You have been appointed as auditor of Uy Inc. Its bookkeeper…9.You have been appointed as auditor of Uy Inc. Its bookkeeper reports the following balance sheet amounts as of June 30, 2021. Current assets P2,953,000 Other assets 6,306,000 Current liabilities 1,674,200 Owners’ equity 5,584,800 A review of account balances reveals the following data. An analysis of current assets discloses the following: Cash P 595,000 Investment securities – trading 400,000 Accounts receivable 683,000 Inventories, including advertising supplies of P35,000 1,275,000 P2,953,000 Other assets include the following: Property, plant and equipment Depreciated book value (cost, P7,750,000) P5,545,000 Deposit with supplier for merchandise ordered for August delivery 107,000 Goodwill recorded on the books to cancel losses incurred by the company in prior years 654,000 P6,306,000 Current liabilities include the following: Payroll payable P 125,500 Taxes payable 88,700 Rent payable 77,000 Accounts payable (net of a P50,000 6-month note received from a supplier who purchased some used equipment on June 29, 2021) 1,063,000 Notes payable 320,000 P1,674,200 Other liabilities include P2,000,000 10% mortgage on property, plant and equipment, payable in semi-annual installments of P200,000 through June 30, 2026. Owners’ equity includes the following: Preferred shares: 150,000 shares outstanding (P20 par value) P3,000,000 Ordinary shares: 1,750,000 shares at P1 stated value 1,750,000 Share premium 834,800 P5,584,800 Common shares were originally issued for P4,950,000 but the losses of the company for the past years were charged against share premium. QUESTIONS: As of June 30, 2021, the audited balance of the following would be: 1 Total current assets a. P3,110,000 b. P3,075,000 c. P3,100,000 d. P3,060,000 2 Total current liabilities a. P1,833,000 b. P2,124,200 c. P1,724,200 d. P2,142,200 3 Total owners’ equity a. P7,950,000 b. P4,950,000 c. P4,930,800 d. P4,390,000 4 Total liabilities and owners’ equity a. P4,930,800 b. P8,655,000 c. P3,724,200 d. P8,650,000 5. Which of the following audit procedures would most likely assist an auditor in identifying conditions and events that may indicate there could be substantial doubt about an entity’s ability to continue as a going concern? a. Review compliance with the terms of debt agreements. b. Confirmation of accounts receivable from principal customers. c. Reconciliation of interest expense with debt outstanding. d. Confirmation of bank balances. AccountingBusinessFinancial AccountingShare Question
