PGD

a.) Wages earned by workers but not paid at

December 31, were consistently omitted from the
records. The amounts omitted were:

December 31, 2013 P 80,000

December 31, 2014 P 60,000
December 31, 2015 P 78,000
 Under (over) statement in Profit Retained Earnings,
2013 2014 2015 1/1/15

Omission of accrued expense

12/31/2013 (80,000) 80,000

12/31/2014 (60,000) 60,000 (60,000)

12/31/2015 (78,000)
Audit Adjusting Entries

Retained Earnings 60,000

Wages Payable 60,000

Wages Expense 78,000

Wages Payable 78,000
Correcting entries for 2016

Retained Earnings 78,000

Wages Expense 78,000
b.) Unused office supplies were overlooked at
the end of each year as follows:

2013 P 32,000
2014 P 25,000
2015 P 22,400
 Under (over) statement in Profit Retained Earnings,
2013 2014 2015 1/1/15

Omission of unused supplies

12/31/2013 32,000 (32,000)

12/31/2014 25,000 (25,000) 25,000

12/31/2015 22,400
Audit Adjusting Entries

Supplies Expense 25,000

Retained Earnings 25,000

Unused Supplies 22,400

Supplies Expense 22,400
Correcting Entries in 2016

Supplies Expense 22,400

Retained Earnings 22,400
c.) Interest receivable was not recorded on December
31, 2013. Interest income was recorded when collected
in 2014

Under (over) statement in Profit

Retained Earnings,
2013 2014 2015 1/1/15
Omission of accrued interest
income

12/31/2013 18,000 (18,000)

No audit adjustment and correcting entries.
 d.) On January 2, 2013, a piece of equipment costing P 42,000
was sold for P 25,000. At the date of sale, the equipment had
accumulated depreciation of P 24,000. The cash received was
recorded as Miscellaneous Income in 2013. In addition,
depreciation was recorded for this equipment in 2013, 2014, and
2015 at the rate of 10% of cost.

Under (over) statement in Profit Retained Earnings,

2013 2014 2015 1/1/15

Sale of Equipment - Proceeds (25,000)

Gain on sale 7,000

Recorded depreciation 4,200 4,200 4,200 (9,600)

Audit Adjusting Entry

Retained Earnings 9,600

Accumulated Depreciation 36,600
Equipment 42,000
Depreciation Expense 4,200
Correcting Entry for 2016

Retained Earnings 5,400

Accumulated Depreciation 36,600
Equipment 42,000
e.) Rental of 60,000 on an equipment, applicable
for 6 months, was received on October 31, 2015.
The entire amount was recorded as revenue upon
receipt and no adjustment was made at the end of
2015

Under (over) statement in Profit Retained Earnings,

2013 2014 2015 1/1/15

Omission of unearned rent (40,000)

No audit adjusting and correcting entries.
 Under (over) statement in Profit
2013 2014 2015 Retained Earnings, 1/1/15
Omission of accrued expense
12/31/2013 (80,000) 80,000
12/31/2014 (60,000) 60,000 (60,000)
12/31/2015 (78,000)
Omission of unused supplies
12/31/2013 32,000 (32,000)
12/31/2014 25,000 (25,000) 25,000
12/31/2015 22,400
Omission of accrued interest income
12/31/2013 18,000 (18,000)
Sale of equipment - Proceeds (25,000)
Gain on sale 7,000
Recorded depreciation 4,200 4,200 4,200 (9,600)
Omission of unearned rent (40,000)
Net under (over) statement (43,800) (800) (58,400) (44,600)
Reported Profit 450,000 290,000 440,000
Corrected Profit 406,200 289,200 383,600