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Toturial 2 questions with solutions.pdf

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AUDITING PROBLEMS PROBLEM NO. 1 – AUDIT OF PROPERTY, PLANT, AND EQUIPMENT (PPE) The TGR Company commenced operations on January 1, 2014. The company’s machinery account is shown below. Date Pa... rticulars Debit Credit Balance Jan. 1, 2014 Purchase P157,200 120,000 132,000 P409,200 Sept. 30, 2014 Purchase on installment Payments from Sept. to Dec. 72,000 481,200 Oct. 3, 2014 Freight and installation 6,000 487,200 Dec. 31, 2014 Depreciation P97,440 389,760 2015 Installment payments for acquisition on Sept. 30, 2014 144,000 533,760 June 30, 2015 Purchase 240,000 773,760 Dec. 31, 2015 Depreciation 154,752 619,008 June 30, 2016 Acquisition – trade in of old machine150,000 769,008 Dec. 31, 2016 Depreciation 153,802 615,206 Jan. 1, 2017 Sale 71,250 543,956 Dec. 31, 2017 Depreciation 108,791 435,165 Oct. 1, 2018 Sale 24,000 411,165 Dec. 31, 2018 Depreciation 82,233 328,932 The details of the transactions are as follows: a) On September 30, 2014, a machine was purchased on an installment basis. The list price was P180,000, but 12 payments of P18,000 each were made by the company. Only the monthly payments were recorded in the machinery account starting with September 30, 2014. Freight and installation charges of P6,000 were paid and charged to the machinery account on October 3, 2014. b) On June 30, 2015, a machine was purchased for P240,000, 2/10, n/30, and recorded at P240,000 when paid for on July 5, 2015. c) On June 30, 2016, the machine acquired for P157,200 was traded for a larger one having a list price of P279,000. Allowance of P129,000 was received on the old machine, the balance of the list price being paid in cash and charged to the machinery account. d) On January 1, 2017, the machine acquired on January 1, 2014 with cost of P132,000 was sold for P75,000. The cost of removal and crating totaled P3,750. e) On October 1, 2018, the machine purchased on January 1, 2014 was sold for P24,000 cash. Assume a 5-year useful life for TGR Company’s machinery. [Show More]

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