Reference no: EM133168231
Question - A purchases cut-off procedure was rendered by your audit staff in line with your audit of the financial statements of Friday Corp. for the period ended December 31, 2021. Inventories were physically counted on December 29 as a result, all goods received on or before December 29 has been included in the physical count which amounted to P449,000. Purchases and Accounts Payable balances per books were at P2,895,000 and P578,000, respectively.
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Receiving Report No.
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Receipt Date
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Invoice Price
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Remarks
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816913
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Dec. 28
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10,600
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Received on consignment basis
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816914
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Dec. 29
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13,600
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FOB Destination
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816915
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Dec. 30
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15,000
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FOB Shipping Point
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816917
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Dec, 31
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10,800
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FOB Shipping Point
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816918
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Dec. 31
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7,200
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Free Alongside the Vessel
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816919
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Dec. 31
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14,500
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FOB Destination
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816920
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Jan. 2
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8,200
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FOB Shipping Point
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816921
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Jan. 2
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9,600
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FOB Seller (In-transit)
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816922
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Jan. 2
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9,100
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FOB Buyer Warehouse (In-transit)
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Audit Notes:
1. The last receiving report recorded in the purchases journal for December was RR No. 816918.
2. Goods received on receiving report no. 816913 were still on hand as of December 31.
3. Receiving report no. 816915 were for goods received from ABC Corp. on a "sale with repurchase agreement basis". The agreement calls for the remittance to ABC Corp. of the amount due on January 5,. The repurchase shall be done 3 months later at P15,000 plus 12% in interest.
4. Receiving report no. 816916 were for goods received on December 30. Supplier's invoice amounting to P8,900 is yet to be received as of the cut-off procedure date.
Required -
1. What is the adjusted balance of inventories as of December 31, 2021?
2. What is the correct accounts payable balance as of December 31, 2021?