The records of Yoimiya Corporation have never been audited. The…

Question The records of Yoimiya Corporation have never been audited. The… The records of Yoimiya Corporation have never been audited. The company is negotiating a large loanfor expansion purposes. The bank has requested that an audit of the company be performed. Duringthe course of the audit, the following facts were determined:• The inventory on December 31, 2020, was overstated by P 11,000.• The inventory on December 31, 2021, was understated by P 25,000.• Total PPE was underdepreciated by P 9,000 in 2020 and in 2021 by P 12,000.• A three-year insurance premium of P 1,800 paid on January 1, 2020, was debited in full toAdministrative Expense at that time.• Accrued wages (an element of Administrative Expense) were not recorded as follows:2020, P900; and 2021, P1,500.• The patent, which originally cost P 17,000, is being amortized to Administrative Expenseover a 17-year life. Evidence clearly indicates that its economic life will approximate 14 yearsfrom date of acquisition.• Service revenues earned but not yet collected were not recognized when earned as follows:2020, P 4,000; and 2021, P 6,500. Revenue is recognized when collection is made.• A delivery truck purchased in January 2021, at a cost of P 22,000, was debited to Sellingexpenses at that time. The truck has an estimated useful life of 10 years and an estimatedresidual value of P 2,000. The company uses straight-line depreciation method.• Allowance for doubtful accounts in 2020 was understated by P 7,500. Accounting Business Financial Accounting Share QuestionEmailCopy link Comments (0)