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    Act1205-Quiz No. 1

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    The document summarizes two problems related to auditing investments. Problem 1 provides transactions for different investments held by Pau Company and requires preparing audit adjustments, supporting computations for sale transactions, and a balance computation. Problem 2 provides journal entries made by Pau Company for trading securities and requires identifying incorrect entries and providing correct entries and audit adjustments.

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    Act1205-Quiz No. 1

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    The document summarizes two problems related to auditing investments. Problem 1 provides transactions for different investments held by Pau Company and requires preparing audit adjustments, supporting computations for sale transactions, and a balance computation. Problem 2 provides journal entries made by Pau Company for trading securities and requires identifying incorrect entries and providing correct entries and audit adjustments.

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    The document summarizes two problems related to auditing investments. Problem 1 provides transactions for different investments held by Pau Company and requires preparing audit adjustments, supporting computations for sale transactions, and a balance computation. Problem 2 provides journal entries made by Pau Company for trading securities and requires identifying incorrect entries and providing correct entries and audit adjustments.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    25 views3 pages

    Act1205-Quiz No. 1

    Uploaded by

    mark
    The document summarizes two problems related to auditing investments. Problem 1 provides transactions for different investments held by Pau Company and requires preparing audit adjustments, supporting computations for sale transactions, and a balance computation. Problem 2 provides journal entries made by Pau Company for trading securities and requires identifying incorrect entries and providing correct entries and audit adjustments.

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    © All Rights Reserved
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    ACT1205

    AUDIT OF INVESTMENT
    QUIZ NO. 1

    Problem 1
    The following transactions appear on the “ FA@FVTPL” account of Pau Company for the
    year 2020.
    Date Particulars Debit Credit
    Apr 1 Purchased 2,000 shares of SMC at
    Php15/share Php 30,000
    May 1 Purchased 4,000 shares of Atlas
    Cons at Php10/share 40,000
    July 1 Purchased 5-year Treasury Notes at
    Php96; face value Php1,000,000.
    Interest dates, July 1 and Jan 1:
    Interest rate , 9% 960,000
    Oct 1 Received 20% share dividend from
    SMC, credited Retained Earnings 6,000
    Nov 5 Sold 800 shares of SMC at
    Php14/share
    Php 11,200
    Dec 10 Sold 1,600 shares of Atlas Cons at
    Php12/share 19,200
    Dec 31 Sold the treasury notes at 97 plus
    accrued interest 1,015,000
    Required:
    1. Prepare Audit adjustments at December 31, 2020, using below format
    Date Entry Made (1 pt) Correct Entry (2 pts) Audit Adjustments (2 pts)
    Apr 1

    May 1

    July 1

    Oct 1

    Nov 5

    Dec 10

    Dec 31
    2. Supporting Computations for November 5, December 10 and December 31
    transactions to compute for Gain or Loss on Sale (10 pts. each)
    November 5
    Selling Price
    Cost
    --------------------

    ===========

    December 10
    Selling Price
    Cost
    --------------------

    ===========

    December 31
    Cash Received
    Less: Accrued Interest
    --------------------------
    Selling Price( exclusive of accrued Interest)
    Cost
    ---------------------------

    ================

    3. Computation of Balance (20pts)

    SMC Atlas Treasury


    Date Transactions Notes
    Shares Amount Share Amount Amount
    s
    Apr 1
    May 1
    July 1
    Oct 1
    Nov 5
    Dec 10
    Dec 31

    Balance
    s
    Problem 2

    During 2020, Pau Company made the following journal entries to account for transactions
    involving trading securities:

    2020

    Nov 1 Investment in Trading Securities-


    10% Bangko Sentral Treasury Bonds 106,583
    Cash 106,583
    To record the purchase of Php100,000
    Bangko Sentral Treasury Bonds at 103.50.
    Interest is payable semiannualy on January 1
    and July 1.

    Dec. 31. Unrealized Increase/Decrease in value


    Of Available-for-Sale-Securities 3,983
    Market adjustment-Trading
    Securities 3,983
    To record the decrease in market value of
    the current marketable securities based
    on the following data:

    Cost Market Market Adj


    F Co. Shares Php 25,250 Php 22,350 Php 1,900 (cr)
    D Co. shares 32,450 33,950 1,500 (dr)
    10% Bangko Sentral Treasury
    Bonds 106,583 103,000 3,583

    The beginning balance in market adjustment-trading Securities was a Php500 credit. There
    were no other entries in 2020.

    Required:
    For each incorrect entry, give the entry that should have been made (correct entry)
    and audit adjustments. (present your supporting computations)

    November 1

    Correct Entry

    Audit adjustment

    December 31

    Correct entry

    Audit adjustment

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