Tiêu đề FAR Self Study Part 3.pdf ✅

a. Adjusting entries. Answer # 3 Adjusting entries 1. Record accrued utilities: Debit Utilities Expense ₱200,000 Credit Utilities Payable ₱200,000 2. Accrue probable lawsuit loss: Debit Litigation Loss ₱1,000,000 Credit Accrued Liabilities (or Provision for Litigation) ₱1,000,000 3. Reclassify loan to current portion (move from long-term to current liabilities): Debit Long-term Debt ₱3,000,000 Credit Short-term Debt ₱3,000,000 Problem 4 – Fixed Assets and Depreciation Sigma Manufacturing has the following errors: 1. Repairs of ₱400,000 were capitalized as Machinery. 2. A new machine costing ₱1,200,000 was expensed as Repairs Expense. 3. Depreciation for the year (straight-line, 10 years, no salvage) was not recorded for machinery with a cost of ₱5,000,000. Required: a. Prepare adjusting entries. Answer # 4 Adjusting entries 1. Reclassify incorrectly capitalized repairs (expense them): Debit Repairs Expense ₱400,000 Credit Machinery (or Equipment) ₱400,000 2. Capitalize the new machine (reverse the expense recorded as repairs): Debit Machinery (or Equipment) ₱1,200,000 Credit Repairs Expense ₱1,200,000 3. Record omitted depreciation for machinery costing ₱5,000,000: Annual depreciation = 5,000,000 ÷ 10 = ₱500,000 Debit Depreciation Expense ₱500,000 Credit Accumulated Depreciation ₱500,000 4. Also record depreciation for the newly capitalized machine if placed in service this year (assuming full-year): New machine depreciation = 1,200,000 ÷ 10 = ₱120,000 Debit Depreciation Expense ₱120,000 Credit Accumulated Depreciation ₱120,000 Problem 5 – Cash and Bank Reconciliation Audit of Phoenix Corp. shows: 1. A customer’s ₱500,000 check deposited on Dec. 29, 20X4 was returned NSF on Jan. 4, 20X5, but not adjusted. 2. Outstanding checks of ₱300,000. 3. ₱100,000 bank service charge was discovered but unrecorded. Required: a. Prepare correcting entries. b. Which audit procedure usually uncovers these misstatements? Answer # 5 Adjusting entries 1. Return amount of NSF check to accounts receivable: Debit Accounts Receivable ₱500,000 Credit Cash ₱500,000 2. No entry for outstanding checks. They have already been recorded in the books but not in the bank records. If such cash outflow was not recorded in the books, then, such must be recorded accordingly. 3. Record bank service charge: Debit Bank Service Charge (Expense) ₱100,000 Credit Cash ₱100,000 Which audit procedure uncovers these misstatements Bank reconciliation procedures including obtaining bank confirmations, examining cutoff bank statements and testing reconciling items.