Determine the following as a result of your audit:a. How much is the adjusted retained earnings as of December 31, 2020?b. How much is the adjusted retained earnings as of December 31, 2021?c. How much is the adjusted retained earnings as of December 31, 2022? Other notes and observations:i.On December 31, 2020, JBC Company has goods in transit from suppliers amounting toP78,000 that was shipped FOB Destination. This was not recorded until the goods were receivedon January 10, 2021.ii.JBC Company failed to record supplies on hand at the end of 2021 and 2022 amounting toP4,500 and P3,800, respectively.iii. It was discovered through comparison of company records that dividends are not recorded inthe books until they were paid.iv.On December 31, 2020, the Company bought Land and Building for a lump sum amount ofP12,500,000 when the fair value of the land was at P9,000,000 and the building was atP6,000,000. The building has an estimated useful life of 10 years on the date of sale. The wholeamount paid was debited to Land in 2020.v.On July 1, 2021, the Company purchased a 3-year insurance policy for P300,000. The wholeamount was debited to insurance expense. No adjustments were made yet.vi.On February 12, 2023, the Company paid dividends amounting to P86,000. The date ofdeclaration was on December 15, 2022. The date of record was January 15, 2023. You were engaged to audit the financial statements of JBC Company for the year 2022. Thefollowing information was discovered during your audit:Audit Note I: The retained earnings account showed the following details:Retained EarningsDividends P80,000Dividends P80,000Dividends P80,000Audit Note II:AmountP1,250,000 Beginning balance450,000P20,00023,00027,00030,0001,620,000660,0002,200,000540,0002,660,000Net incomeDate PaidBalance 12/31/2020Net incomeBalance 12/31/2021During the investigation, you discovered that sales commission expenses were recorded whenpaid. Due to this, sales commissions that should have been recorded as expense and payablesin the previous year were recorded the following year. These amounts were summarized below.Net incomeBalance 12/31/2022January 10, 2020January 8, 2021January 11, 2022January 7, 2023

Retained earnings are the accumulated earnings of the company, and the ending balance of retained…

You were engaged to audit the financial statements of JBC Company for the year 2022. The following information was discovered during your audit: Audit Note I: The retained earnings account showed the following details: Retained Earnings Dividends P80,000 Dividends P80,000 P1,250,000 450,000 1,620,000 660,000 Beginning balance Net income Balance 12/31/2020 Net income

You were engaged to audit the financial statements of JBC Company for the year 2022. The following information was discovered during your audit: Audit Note I: The retained earnings account showed the following details: Retained Earnings Dividends P80,000 Dividends P80,000 P1,250,000 450,000 1,620,000 660,000 Beginning balance Net income Balance 12/31/2020 Net income

Auditing: A Risk Based-Approach (MindTap Course List)

11th Edition

ISBN:9781337619455

Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Publisher:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Chapter13: Auditing Debt, Equity, And Long-term Liabilities Requiring Management Estimates

Section: Chapter Questions

Problem 28RQSC

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You audited the financial statements of PIS Corp. for the first time in 2022. The company started its operation in early 2020. Upon investigation, you discovered the following information: a. The company reported the net income at P104,000, P140,000 and P160,000 in 2020, 2021, and 2022, respectively. b. The company consistently omitted the following: 2020                   2021            2022               Prepaid insurance                                       2,000                   4,000                  6,000               Accrued salaries                                           7,500                   6,200                  8,300               Unearned rent                                              5,000                   6,000                  7,000 c. Deliveries of merchandise to customers at December 31 of each year end were recorded as sales upon collection the following year. The corresponding sales price of the said deliveries were P15,000, P12,000 and P14,000…
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You audited the financial statements of PIS Corp. for the first time in 2021. The company started its operation in early 2019. Upon investigation, you discovered the following information: The company reported the net income at P104,000, P140,000 and P160,000 in 2019, 2020, and 2021, respectively. The company consistently omitted the following: 2019 2020 2021 Prepaid insurance 2,000 4,000 6,000 Accrued salaries 7,500 6,200 8,300 Unearned rent 5,000 6,000 7,000 Deliveries of merchandise to customers at December 31 of each year end were recorded as sales upon collection the following year. The corresponding sales price of the said deliveries were P15,000, P12,000 and P14,000 in 2019, 2020, and 2021, respectively. Inventory counts were conducted on December 31 of each year before any deliveries and receipts were made on the said date. Sales were made consistently at a gross profit rate of 40% of sales. Purchases in transit at each year end…
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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’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…