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You are engaged to perform the first audit of the Torrents Company for the year ended December 31, 2022. You find the following account balances related to shareholders' equity:
| P3,000,000 | |
| Ordinary Shares, P10 par | 6,500,000 |
| Capital Surplus | (1,640,000) |
| Retained Earnings | 15,000,000 |
Due to the antiquated terminology and negative balance, you examine the Capitak Surplus account first and find in it the following entries:
| Credit/(Debit) | |
| Premium on Ordinary Shares | P2,710,000 |
| Capital from donated land | 1,600,000 |
| Treasury shares (50,000 ordinary shares at cost) | (750,000) |
| Premium on Preference Shares | 300,000 |
| Appropriation for contingencies | 2,500,000 |
| Share dividend issued (50%) | (2,000,000) |
| Prior period adjustment (net of income taxes) | (1,200,000) |
| Loss from the fire (uninsured), 2022 | (1,800,000) |
| Property dividend distributed | (600,000) |
| Cash dividends declared to be paid in 2023 | (2,400,000) |
| Balance | (P1,640,000) |
Your examination of the Preference Shares and Ordinary Shares accounts reveals that the amounts shown correctly state the total par value of the issued share capital. The Retained Earnings account contains the
4. The total share premium (additional paid in capital) is
5. The total shareholders' equity is
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- You’ve been hired to perform an audit of Hubbard Company for the year ended December 31, 2019. You find the following account balances related to shareholders’ equity: Preferred stock, $100 par $ 33,000 Common stock, $10 par 68,000 Capital surplus (15,100) Retained earnings 172,000 Because of the antiquated terminology and negative balance, you examine the Capital Surplus account and find the following entries: Credit (Debit) Additional paid-in capital on common stock $ 27,700 Capital from donated land 16,900 Treasury stock (400 common shares at cost) (5,600) Additional paid-in capital on preferred stock 2,000 Stock dividend (50%) (20,000) Prior period adjustment (net of income taxes) (10,100) Loss from fire (uninsured), 2018 (18,100) Property dividend declared (5,600) Cash dividends declared (23,300) Balance $ (36,100) Your examination of the Preferred Stock and Common Stock accounts reveals that the amounts shown correctly state the…You are the senior in charge of the audit of the accounts of the Domino Industries, Inc. You and your staff have just completed the field work relative to the December 31, 2020 audit. The adjusted trial balance and certain additional information related thereto appearing in your working papers are as follows: Cash 240,000 Marketable Securities 95,000 Investment in Affiliated Companies 350,000 Accounts Receivable (including P120,000 due after one year) 680,000 Subscription Receivable 20,000 Inventories - Finished Goods 620,000 - Goods in Process 155,000 - Raw Materials 470,000 Treasury Stock (cost of 100 shares) 11,000 Construction in Progress 220,000 Land 460,000 Buildings, Machinery and Equipment 4,350,000 Cash Surrender Value of Life Insurance 60,000 Prepaid Expenses 50,000 Pre-operating Expenses 120,000 Unamortized…In line with your audit with DAVE, Inc. financial statements, the company accountantpresented to you the balance sheet that follows. You reviewed the client’s accountingrecords and books based thereon. You discovered that books of accounts are inagreement in the said balance sheet as presented below: DAVE, INC.STATEMENT OF FINANCIAL POSITIONDecember 31, 2021 ASSETS LIABILITIES AND OWNERS EQUITYCash P 80,000 Accounts Payable P 32,000Accounts Receivable 160,000 Notes Payable 64,000Notes Receivable 48,000 Capital Stock 160,000Inventories 400,000 Retained Earnings 432,000Total P 688,000 Total P 688,000 Further review and investigation of the company’s books revealed the followingomissions and errors which were not corrected during the year of errors: 2018 2019…
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- You are the audit manager of Matfine & Co and are reviewing the key issues identified in the files of two audit clients as follows: Pito Industries Co (Pito) Pito’s year-end was 31 March 2019 and the draft financial statements show revenue of $32·2 million, receivables of $6·1 million and profit before tax of $3.4 million. The fieldwork stage for this audit has been completed. A customer of Pito owed an amount of $375,000 at the year-end. Testing of receivables in April highlighted that no amounts had been paid to Pito from this customer as they were disputing the quality of certain goods received from Pito. The finance director is confident the issue will be resolved and no allowance for receivables was made with regards to this balance. Albo Trading Co (Albo) Albo is a new client of Matfine & Co, its year-end was 31 January 2019 and the firm was only appointed auditors in February 2019, as the previous auditors were suddenly unable to undertake the audit. The fieldwork…You are the audit manager of Matfine & Co and are reviewing the key issues identified in the files of two audit clients as follows: 1) Pito Industries Co (Pito) Pito’s year-end was 31 March 2019 and the draft financial statements show revenue of $32·2 million, receivables of $6·1 million and profit before tax of $3.4 million. The fieldwork stage for this audit has been completed. A customer of Pito owed an amount of $375,000 at the year-end. Testing of receivables in April highlighted that no amounts had been paid to Pito from this customer as they were disputing the quality of certain goods received from Pito. The finance director is confident the issue will be resolved and no allowance for receivables was made with regards to this balance. 2) Albo Trading Co (Albo) Albo is a new client of Matfine & Co, its year-end was 31 January 2019 and the firm was only appointed auditors in February 2019, as the previous auditors were suddenly unable to undertake the audit. The fieldwork…Subsequent Event Below here were subsequent event that occurs in your client. Consider that all events were has material effect on client’s financial statement. The auditor is auditing financial statement for the year ended December 31, 2020 and is completing the audit in March 15, 2021.1) On January 12, 2021, auditor found that client made overstatement to their longlived asset account on 2020 year-end financial statement2) On January 31, 2021, client announced that they do stock split 2 for 1 for their entire common shares 3) The client purchased raw material that was received just before year-end. The purchase was recorded based on its estimated value. The invoice was not received until February 5, 2021, and the cost was substantially different than was estimated4) On February 15, 2021, the civil court decided that Client Company must pay compensation loss due to defect product sold to their customer. lawsuits started in court since June 20205) On February 20, 2021, a major of…
