AUDITING PROBLEMS 1 COMPREHENSIVE PROBLEM SRV & Co. CPAs accepted a new client, Global Home Depot, Inc., on November 2014. Your Senior Auditor assigned you as the Audit Clerk for the new engagement for the calendar year 2014. On the same month, you visited their principal address to obtain an understanding of the nature of their business. Global Home Depot, Inc. was incorporated in the Philippines and registered with the Philippine Securities and Exchange Commission (SEC) on March 12, 2010. The Company is primarily engaged in the business of retailing, merchandising, buying, selling, marketing, trading, or otherwise dealing household and builder hardware. Merchandising industry makes products in retail outlets available to customers, primarily by stocking shelves and displays. Household and builder hardware product merchandisers occupy an intermediate market between the manufacturers and the end users. The manufacturers typically focus on producing high volumes of their product. The merchandisers purchase these finished products from the manufacturers. They distribute these products through retail. This is very common because it somehow eliminates the manufacturers’ burden to further market their product. The Company’s main line of business is purchasing and selling household and builder hardware like keys, locks, hinges, chains, tools, machine parts, doors, windows, bathrooms, etc. These are used by homeowners and builders for residential and commercial purposes. The entity has several suppliers for the merchandise within and outside Cebu and they are normally sold to walk-in customers, to the City Government of Cebu and Mandaue, and to regular customers who are usually construction companies. The registered business address of the Company is Ground Floor, The Columbia Tower, A.S. Fortuna Street Mandaue City, Cebu (see attachment 1). The Company is situated near the national road which is very accessible to the public. The Company location is also accessible to trucks and public utility vehicles. The Company is under a lease agreement with The Columbia Tower Real Estate, Inc. for the space used by the Company. The Company is controlled by Ms. Cynthia D. Chungunco, who owns 78.21% of the Company’s outstanding shares. The remaining 21.79% of the shares are publicly held. The Company has its primary listing on the Philippine Stock Exchange. As of December 31, 2012 and 2013, the Company has 24 and 26 equity holders, respectively (see attachment 2 for the organizational structure). The Company has an internally-generated accounting system but manually processes pre-numbered source documents. According to a survey, companies that do better than industry averages tend to use and
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AUDITING PROBLEMS 1
COMPREHENSIVE PROBLEM
SRV & Co. CPAs accepted a new client, Global Home Depot, Inc., on November 2014. Your Senior
Auditor assigned you as the Audit Clerk for the new engagement for the calendar year 2014. On the
same month, you visited their principal address to obtain an understanding of the nature of their
business.
Global Home Depot, Inc. was incorporated in the Philippines and registered with the Philippine Securities and
Exchange Commission (SEC) on March 12, 2010. The Company is primarily engaged in the business of
retailing, merchandising, buying, selling, marketing, trading, or otherwise dealing household and builder
hardware.
Merchandising industry makes products in retail outlets available to customers, primarily by stocking shelves
and displays. Household and builder hardware product merchandisers occupy an intermediate market between
the manufacturers and the end users. The manufacturers typically focus on producing high volumes of their
product. The merchandisers purchase these finished products from the manufacturers. They distribute these
products through retail. This is very common because it somehow eliminates the manufacturers’ burden to
further market their product.
The Company’s main line of business is purchasing and selling household and builder hardware like keys,
locks, hinges, chains, tools, machine parts, doors, windows, bathrooms, etc. These are used by homeowners
and builders for residential and commercial purposes. The entity has several suppliers for the merchandise
within and outside Cebu and they are normally sold to walk-in customers, to the City Government of Cebu and
Mandaue, and to regular customers who are usually construction companies.
The registered business address of the Company is Ground Floor, The Columbia Tower, A.S. Fortuna Street
Mandaue City, Cebu (see attachment 1). The Company is situated near the national road which is very
accessible to the public. The Company location is also accessible to trucks and public utility vehicles. The
Company is under a lease agreement with The Columbia Tower Real Estate, Inc. for the space used by the
Company.
The Company is controlled by Ms. Cynthia D. Chungunco, who owns 78.21% of the Company’s outstanding
shares. The remaining 21.79% of the shares are publicly held. The Company has its primary listing on the
Philippine Stock Exchange. As of December 31, 2012 and 2013, the Company has 24 and 26 equity holders,
respectively (see attachment 2 for the organizational structure).
The Company has an internally-generated accounting system but manually processes pre-numbered source
documents. According to a survey, companies that do better than industry averages tend to use and
understand specialized computer software tools to manage specific aspects of merchandising. It has identified
forecasting as the most important tool. The system helps predict what goods customers might want and
stocking patterns to satisfy customer demand while minimizing the amount of capital invested in excess
inventory. Seventy-five percent of the retailers surveyed said that retail forecasting is extremely important to
financial success. In the past, forecasting systems were largely seen as supply chain management tools,
where the focus was on reducing operational costs. Now such systems and techniques have become
important to expand sales opportunities, moving from a strictly bottom-line focus to a top-line one. Almost
equally as important as demand forecasting is customer analytics. One cannot create a good demand forecast
without understanding the customers and what they might want.
The Company approximately has 43 regular customers, an average of 300 walk-in customers per day, and the
City Government of Cebu and Mandaue. The Company negotiates sales orders with the majority of their
customers. The Company does not have any long-term contract with any customer. Because of the nature the
Company’s products and the short lead time order cycle, backlog is not a significant factor of the business. The
Company believes that substantially all of the orders existing as of December 31 will be shipped prior to the
end of the first quarter of the next year. In general, the Company competes in the home and builder hardware
products with the other companies in within Cebu and Mandaue City. A few of the Company’s competitors may
be larger, have greater financial resources or have less financial leverage than the Company does. As a result,
the competitors may be better positioned to respond to any downward pricing pressure or other adverse
economic or industry conditions or to identify and acquire companies or product lines compatible with their
business.
The primary goal of the company is to sustain itself in the long run of competition and to increase its market
share in the future. The management continuously gives good service to its customers by availing quality
products from its suppliers. It hopes that by putting up branches on strategic locations, it will be able to
increase profitability and at the same time satisfying the needs of the customers. It is currently advertising on
media, specifically on radio stations and print, to make the business known to the public. As a corporate social
responsibility, it actively participates on the preservation of the natural environment. The management says
that their strategies do not contribute much to the overall success of the Company and they admit that they are
not that aggressive in terms of promotion.
The Company sees itself as a growing entity. The management believes that it will be able to expand its
operations especially because they are yet starting. Ms. Chungunco is pressuring the management to expand
sooner in order to also get fully the market share for the City Government of Cebu and because the opportunity
revenue is high.
As of the date, the company has no investments in associate, subsidiary or joint venture. For now, the
management has no plans of entering into acquisition of companies under its name or disposing its equity
interest. However, the company has planned initially in 2013 to open a branch in Cebu City in order to get a
wider share in the market. The Company has also planned to obtain loans from the bank to finance its
expansion plans.
The preparation of the financial statements in conformity with accounting principles generally accepted in the
Philippines requires the management of the Company to make decisions based upon estimates, assumptions,
and factors it considers relevant to the circumstances. Such decisions include the selection of applicable
principles and the use of judgment in their application, the results of which could differ from those anticipated.
The Company has considered the following as their most critical accounting policies:
1. Accounts receivable valuation
2. Inventory Valuation
3. Revenue recognition
The management reviews the estimates on a regular basis but believes that these estimates are reasonable,
but actual results could differ from these estimates.
Valuation of accounts receivable
The accounts receivable of the Company represent those amounts that have been billed to the Company’s
regular customers and to the City Government of Cebu and Mandaue but not yet collected. The Company
records an allowance for doubtful accounts based on the portion of those accounts receivable that the
Company believes are potentially uncollectible based on various factors, including historical experience and
creditworthiness of customers. If the financial condition of customers were to deteriorate, resulting in
impairment of their ability to make payments, additional allowances may be required. Changes in judgments on
these factors could impact the timing of costs recognized.
Valuation of inventories
The company states their inventories at the lower of cost or market. The Company determines the cost basis
their inventory on a first-in-first-out basis using actual costs. Changes in product demand and their customer
base may affect the value of inventory on hand, which may require provisions for obsolescence.
Revenue recognition
The Company recognizes revenue at the point of sale. The Company treats sales returns and allowances as
reductions to sales.
ORGANIZATIONAL CHART
BOARD OF DIRECTORS
CYNTHIA D. CHUNGUNCO
President
JOHN F. GOGeneral Manager
MANOLO F. CHUA
Purchaser
GERRY S. VELORA
Inventory Clerk
MIMI L. GARCIA
Sales Manager
CHARLOTE R. AGUILARChief Accountant
CHRISTINE D. LAPINID
Cashier
MARLON S. YUAccountant 1
ANNIE T. DALON
Accountant 2
ARMANDO G. SUICOSupport Head
GEOGRAPHICAL LOCATION
Prior to the end of November 2014, you went back to the Global Home Depot, Inc. to examine their
control manual in order for you to document your understanding of the design of the internal control
and assess the control risk.
Purchasing / Disbursement Cycle
Whenever a certain inventory level goes below the reorder point, the Inventory Clerk will report to the
Purchaser for requisitioning. The Purchaser will determine the supplier and will send copy of the purchase
order to the supplier (via e-mail or by fax), to the Accounting Office and to the one who will receive the goods
(a copy with no details as to the quantity). Upon receipt of the goods, the one who receives will count them and
will notify the Accounting Office of such receipt by providing a receiving report. The Accounting Office will
compare the receiving report with the purchase order and the supplier’s invoice, and will record the related
liability. The Accounting Office will send the necessary documents for payment to the President. The President
will review the accuracy and authenticity of the documents prior to the approval of the vouchers for payment.
Then the check will be prepared and mailed to the supplier and the source documents will be stamped “PAID.”
The Accounting Office will then update the Accounts Payable general and subsidiary ledger.
Revenue / Receipts Cycle
Credit will never be granted to walk-in customers. For regular customers and the City Government of Cebu and
Mandaue, the approval of the Sales Manager must be obtained before credit sales will be granted. Copies of
the approved sales order will be sent to the warehouse (c/o the Inventory Clerk) and to the Accounting Office.
The Inventory Clerk will move out the inventory to be shipped from the warehouse and will update the
perpetual inventory records. The goods will be sent to the carrier and shall be evidenced by a bill of lading. The
Accounting Office will compare the bill of lading with the sales order and will prepare the invoice to be sent to
the customer. All collections shall be made by means of check. One accounting staff shall receive the check
and will immediately send such to the President for the necessary endorsement. The cashier will prepare the
deposit slip of the collections for the day. Another accounting staff will update the general and subsidiary
ledger of Accounts Receivable. The President will be the approving officer for any write-off of receivables.
On the first week of December 2014, you went back to the Global Home Depot, Inc. after documenting
your understanding of the design of the internal control and assessing the control risk. For two weeks,
you performed a test on the following controls:
A. Disbursement Cycle
a. Purchase orders were properly authorized.
b. Goods were received and reconciled to the purchase order.
c. The amounts appearing on the checks made are the same with the supplier’s invoice.
d. Checks were signed by authorized persons.
e. Supporting documents are cancelled.
B. Receipts Cycle
a. Sales were properly authorized.
b. Sales invoice amounts are the same with the approved sales order.
c. Collection receipt amounts are the same with the billings per sales invoice.
d. Collections for the day were deposited to the bank on the same day.
You randomly selected 5 purchase transactions for nine-month period ending September 30, 2014 and
performed a walkthrough on these transactions. You asked the client to provide you all the source documents
for these transactions and any cancelled checks made as payments to the suppliers (see attachments).
You also randomly selected 5 sales transactions for nine-month period ending September 30, 2014 and asked
the client to provide you the source documents to substantiate the sales (see attachments).
You obtained a sample of a deposit slip to ascertain that collections are deposited on the same day they are
received.
DISBURSEMENTS TEST OF CONTROLS
Purchase Order No. :
From:
Freight Charge:
TOTALS:
RECEIVED
By: Date Received:
Abrasive blades
165.00
85.00
49,500.00
17,000.00
GLOBAL HOME DEPOT, INC.
RECEIVING REPORT
00-2-134
UNIVERSAL HOME BUILDERS
Angle Iron
GERRY S. VELORA 02/18/14
QUANTITY DESCRIPTION PRICE AMOUNT
300
200
66,500.00
VENDOR ` SHIP TO
Item No. Amount
49,500.00
17,000.00
66,500.00
SPECIAL INSTRUCTIONS
GERRY S. VELORA 02/15/14
Date
MANOLO F. CHUA 02/15/14
Approved by Date
HJR Builders Global Home Depot
GLOBAL HOME DEPOT, INC.Ground Floor, The Columbia Tower, PURCHASE REQUISITION
A.S. Fortuna Street, Mandaue City, Cebu No. 000-2-45986
Requisition Date Required by Date Instructions Budget Code
02/15/14
Quantity Description G.L. Account No. Unit Price
300 Angle Iron 165.00
Requested by
TOTAL AMOUNT
85.00200 Abrasive blades
VENDOR ` SHIP TO
Terms
Item No. Amount
49,500.00
17,000.00
66,500.00
OTHER INSTRUCTIONS
MANOLO F. CHUA
Purchasing Officer
Date:
Budget Code
02/16/14
Requisition Date F.O.B.Date of Order Required by Date
02/15/14
02/16/14
HJR Builders
TOTAL AMOUNT
Global Home Depot
Angle Iron
Abrasive blades
Quantity Description Unit Price
GLOBAL HOME DEPOT, INC.
Ground Floor, The Columbia Tower, PURCHASE ORDERA.S. Fortuna Street, Mandaue City, Cebu NO. 00-2-134
300
200
165.00
85.00
Ship To: Bill To:
GLOBAL HOME DEPOT, INC. GLOBAL HOME DEPOT, INC.
Ground Floor, The Columbia Tower, Ground Floor, The Columbia Tower,
A.S. Fortuna Street, Mandaue City, Cebu A.S. Fortuna Street, Mandaue City, Cebu
P.O. NUMBER
00-2-134
Amount
49,500.00
17,000.00
SUB TOTAL 59,375.00
TAX 7,125.00
TOTAL DUE 66,500.00
HJR BUILDERSINVOICE
Osmena Blvd., Cebu City
(032) 567-7890 INVOICE NO. 454589-54445
Quantity Description Unit Price
DATE:02/18/2014
SALESPERSON DATE SHIPPED SHIPPED VIA F.O.B. POINT TERMS
300 Angle Iron 165.00
200 Abrasive blades 85.00
VENDOR ` SHIP TO
Item No. Amount
3,000.00
7,500.00
30,000.00
40,500.00
SPECIAL INSTRUCTIONS
GERRY S. VELORA 04/26/14
Date
MANOLO F. CHUA 04/26/14
Approved by Date
25.00
1,500.00
300
20
Rebar Clutter
Plastic high chair
Requested by
TOTAL AMOUNT
Quantity Description G.L. Account No. Unit Price
100 Float Pans 30.00
Requisition Date Required by Date Instructions Budget Code
04/26/14
SOUTH HOME DEPOT Global Home Depot
GLOBAL HOME DEPOT, INC.Ground Floor, The Columbia Tower, PURCHASE REQUISITION
A.S. Fortuna Street, Mandaue City, Cebu No. 000-4-87236
VENDOR ` SHIP TO
Terms
Item No. Amount
3,000.00
7,500.00
30,000.00
40,500.00
OTHER INSTRUCTIONS
MANOLO F. CHUA
Purchasing Officer
Date:
100
300
20
30.00
25.00
1500.00Plastic high chair
GLOBAL HOME DEPOT, INC.
Ground Floor, The Columbia Tower, PURCHASE ORDERA.S. Fortuna Street, Mandaue City, Cebu NO. 00-4-134
04/27/14
SOUTH HOME DEPOT
TOTAL AMOUNT
Global Home Depot
Float Pans
Rebar Clutter
Quantity Description Unit Price
Budget Code
04/27/14
Requisition Date F.O.B.Date of Order Required by Date
04/26/14
Purchase Order No. :
From:
Freight Charge:
TOTALS:
RECEIVED
By: Date Received:GERRY S. VELORA 04/28/14
QUANTITY DESCRIPTION PRICE AMOUNT
100
300
20
40,500.00
GLOBAL HOME DEPOT, INC.
RECEIVING REPORT
00-4-134
UNIVERSAL HOME BUILDERS
Float Pans
Plastic high chair 30,000.00
Rebar Clutter
30.00
25.00
1500.00
3,000.00
7,500.00
Ship To: Bill To:
GLOBAL HOME DEPOT, INC. GLOBAL HOME DEPOT, INC.
Ground Floor, The Columbia Tower, Ground Floor, The Columbia Tower,
A.S. Fortuna Street, Mandaue City, Cebu A.S. Fortuna Street, Mandaue City, Cebu
P.O. NUMBER
00-4-134
Amount
3,000.00
7,500.00
30,000.00
SUB TOTAL 36,160.71
TAX 4,339.29
TOTAL DUE 40,500.00
300
20
Rebar Clutter
Plastic high chair
25.00
100 Float Pans 30.00
1,500.00
Quantity Description Unit Price
DATE:04/30/2014
SALESPERSON DATE SHIPPED SHIPPED VIA F.O.B. POINT TERMS
SOUTH HOME DEPOTINVOICE
Poblacion, Talisay, Cebu
(032) 431-5609 INVOICE NO. 3457-441952
VENDOR ` SHIP TO
Item No. Amount
12,000.00
12,000.00
2,500.00
26,500.00
SPECIAL INSTRUCTIONS
GERRY S. VELORA 05/10/14
Date
MANOLO F. CHUA 05/10/14
Approved by Date
UNIVERSAL HOME BUILDERS Global Home Depot
GLOBAL HOME DEPOT, INC.Ground Floor, The Columbia Tower, PURCHASE REQUISITION
A.S. Fortuna Street, Mandaue City, Cebu No. 000-5-97236
Requisition Date Required by Date Instructions Budget Code
05/10/14
Quantity Description G.L. Account No. Unit Price
200 Felker Diamond Blades 60.00
Requested by
TOTAL AMOUNT
40.00
50.00
300
50
Abrasive Blades
Cup Stones
VENDOR ` SHIP TO
Terms
Item No. Amount
12,000.00
12,000.00
2,500.00
26,500.00
OTHER INSTRUCTIONS
MANOLO F. CHUA
Purchasing Officer
Date:
Budget Code
05/11/14
Requisition Date F.O.B.Date of Order Required by Date
05/10/14
05/11/14
UNIVERSAL HOME BUILDERS
TOTAL AMOUNT
Global Home Depot
Felker Diamond Blades
Abrasive Blades
Quantity Description Unit Price
GLOBAL HOME DEPOT, INC.
Ground Floor, The Columbia Tower, PURCHASE ORDERA.S. Fortuna Street, Mandaue City, Cebu NO. 00-5-131
200
300
50
60.00
40.00
50.00Cup Stones
Purchase Order No. :
From:
Freight Charge:
TOTALS:
RECEIVED
By: Date Received:
Cup Stones 2,500.00
Abrasive Blades
60.00
40.00
50.00
12,000.00
12,000.00
GLOBAL HOME DEPOT, INC.
RECEIVING REPORT
00-5-131
UNIVERSAL HOME BUILDERS
Felker Diamond Blades
GERRY S. VELORA 05/14/14
QUANTITY DESCRIPTION PRICE AMOUNT
200
300
50
26,500.00
Ship To: Bill To:
GLOBAL HOME DEPOT, INC. GLOBAL HOME DEPOT, INC.
Ground Floor, The Columbia Tower, Ground Floor, The Columbia Tower,
A.S. Fortuna Street, Mandaue City, Cebu A.S. Fortuna Street, Mandaue City, Cebu
P.O. NUMBER
00-5-131
Amount
12,000.00
12,000.00
2,500.00
SUB TOTAL 23,660.71
TAX 2,839.29
TOTAL DUE 26,500.00
UNIVERSAL HOME BUILDERSINVOICE
Borromeo St., Cebu City
(032) 555-5555 INVOICE NO. 852122-12455
Quantity Description Unit Price
DATE:05/15/2014
SALESPERSON DATE SHIPPED SHIPPED VIA F.O.B. POINT TERMS
200 Felker Diamond Blades 60.00
50.00
300
50
Abrasive Blades
Cup Stones
40.00
VENDOR ` SHIP TO
Item No. Amount
4,500.00
6,250.00
67,500.00
78,250.00
SPECIAL INSTRUCTIONS
GERRY S. VELORA 08/03/14
Date
MANOLO F. CHUA 08/03/14
Approved by Date
SOUTH HOME DEPOT Global Home Depot
GLOBAL HOME DEPOT, INC.Ground Floor, The Columbia Tower, PURCHASE REQUISITION
A.S. Fortuna Street, Mandaue City, Cebu No. 000-8-97136
Requisition Date Required by Date Instructions Budget Code
08/03/14
Quantity Description G.L. Account No. Unit Price
150 Float Pans 30.00
Requested by
TOTAL AMOUNT
25.00
1,500.00
250
45
Rebar Clutter
Plastic high chair
VENDOR ` SHIP TO
Terms
Item No. Amount
4,500.00
6,250.00
67,500.00
78,250.00
OTHER INSTRUCTIONS
MANOLO F. CHUA
Purchasing Officer
Date:
Budget Code
08/04/14
Requisition Date F.O.B.Date of Order Required by Date
08/03/14
08/04/14
SOUTH HOME DEPOT
TOTAL AMOUNT
Global Home Depot
Float Pans
Rebar Clutter
Quantity Description Unit Price
GLOBAL HOME DEPOT, INC.
Ground Floor, The Columbia Tower, PURCHASE ORDERA.S. Fortuna Street, Mandaue City, Cebu NO. 00-8-831
150
250
45
30.00
25.00
1500.00Plastic high chair
Purchase Order No. :
From:
Freight Charge:
TOTALS:
RECEIVED
By: Date Received:
Plastic high chair 67,500.00
Rebar Clutter
30.00
25.00
1500.00
4,500.00
6,250.00
GLOBAL HOME DEPOT, INC.
RECEIVING REPORT
00-8-831
UNIVERSAL HOME BUILDERS
Float Pans
GERRY S. VELORA 08/10/14
QUANTITY DESCRIPTION PRICE AMOUNT
150
250
45
78,250.00
Ship To: Bill To:
GLOBAL HOME DEPOT, INC. GLOBAL HOME DEPOT, INC.
Ground Floor, The Columbia Tower, Ground Floor, The Columbia Tower,
A.S. Fortuna Street, Mandaue City, Cebu A.S. Fortuna Street, Mandaue City, Cebu
P.O. NUMBER
00-8-831
Amount
4,500.00
6,250.00
67,500.00
SUB TOTAL 69,866.07
TAX 8,383.93
TOTAL DUE 78,250.00
SOUTH HOME DEPOTINVOICE
Poblacion, Talisay, Cebu
(032) 431-5609 INVOICE NO. 852122-12411
Quantity Description Unit Price
DATE:09/09/2014
SALESPERSON DATE SHIPPED SHIPPED VIA F.O.B. POINT TERMS
150 Float Pans 30.00
1,500.00
250
45
Rebar Clutter
Plastic high chair
25.00
VENDOR ` SHIP TO
Item No. Amount
16,500.00
17,000.00
33,500.00
SPECIAL INSTRUCTIONS
GERRY S. VELORA 09/24/14
Date
MANOLO F. CHUA 09/24/14
Approved by Date
HJR BUILDERS Global Home Depot
GLOBAL HOME DEPOT, INC.Ground Floor, The Columbia Tower, PURCHASE REQUISITION
A.S. Fortuna Street, Mandaue City, Cebu No. 000-9-24134
Requisition Date Required by Date Instructions Budget Code
09/24/14
Quantity Description G.L. Account No. Unit Price
100 Angle Iron 165.00
Requested by
TOTAL AMOUNT
85.00 200 Abrasive blades
VENDOR ` SHIP TO
Terms
Item No. Amount
16,500.00
17,000.00
33,500.00
OTHER INSTRUCTIONS
MANOLO F. CHUA
Purchasing Officer
Date:
Budget Code
09/25/14
Requisition Date F.O.B.Date of Order Required by Date
09/24/14
09/25/14
HJR BUILDERS
TOTAL AMOUNT
Global Home Depot
Angle Iron
Abrasive blades
Quantity Description Unit Price
GLOBAL HOME DEPOT, INC.
Ground Floor, The Columbia Tower, PURCHASE ORDERA.S. Fortuna Street, Mandaue City, Cebu NO. 00-9-241
100
200
165.00
85.00
Purchase Order No. :
From:
Freight Charge:
TOTALS:
RECEIVED
By: Date Received:
Abrasive blades
165.00
85.00
16,500.00
17,000.00
GLOBAL HOME DEPOT, INC.
RECEIVING REPORT
00-9-241
UNIVERSAL HOME BUILDERS
Angle Iron
GERRY S. VELORA 09/30/14
QUANTITY DESCRIPTION PRICE AMOUNT
100
200
33,500.00
Ship To: Bill To:
GLOBAL HOME DEPOT, INC. GLOBAL HOME DEPOT, INC.
Ground Floor, The Columbia Tower, Ground Floor, The Columbia Tower,
A.S. Fortuna Street, Mandaue City, Cebu A.S. Fortuna Street, Mandaue City, Cebu
P.O. NUMBER
00-9-241
Amount
16,500.00
17,000.00
SUB TOTAL 29,910.71
TAX 3,589.29
TOTAL DUE 33,500.00
HJR BUILDERSINVOICE
Osmena Blvd., Cebu City
(032) 567-7890 INVOICE NO. 454589-54434
Quantity Description Unit Price
DATE:09/09/2014
SALESPERSON DATE SHIPPED SHIPPED VIA F.O.B. POINT TERMS
100 Angle Iron 165.00
200 Abrasive blades 85.00
RECEIPTS TEST OF CONTROLS
Customer Name Date Phone
Address
City State ZIP
Ship to Address
City State ZIP
Special Instructions
Item Number
Order Taken by
Labor
Total Due 15,000.00
Gross Total 13,392.86
Tax 1,607.14
Shipping
Bathroom Sink 215 27.91 6,000.00
Description Quantity Unit Price Extended Price
Tissue Holder 200 45.00 9,000.00
Sales OrderCebu City Government 05/26/14
Ground Floor, The Columbia Tower,
A.S. Fortuna Street, Mandaue City, Cebu
No. 00005284
Name Name
Company
Street
Date 05/28/14 City, State
Dept Acct Zip Code
Number Weight
of (Subject
Packages to Change)
Kind of Package
Serial NumbersDescription of Articles
Special Marks, and Exceptions
Tissue Holder
Bathroom Sink
GLOBAL HOME DEPOT, INC. Bill of Lading
FROM TO
GLOBAL HOME DEPOT, INC. Cebu City Government
Sold To: Bill To:
Quantity Amount
200 9,000.00
215 6,000.00
SUB TOTAL 13,392.86
TAX 1,607.14
TOTAL DUE 15,000.00
03/21/14
Description Unit Price
Tissue Holder
Bathroom Sink
45.00
27.91
Customer Cebu City Government
Date Terms P.O. Number
GLOBAL HOME DEPOT, INC. INVOICEGround Floor, The Columbia Tower, No. 10005284
A.S. Fortuna Street, Mandaue City, Cebu
In payment of Invoice(s)
No.
10005284 P 15,000.00
OFFICIAL RECEIPT NO. 042-114
Date 04/21/14
Received from
TOTAL P 15,000.00 Address
CASH 15,000.00 the sum of
BANK/CHECK NO (P 15,000.00 )
SUB-TOTAL P 13,392.86
TAX 1,607.14
TOTAL DUE P 15,000.00
Permit No. RD2-02-093 NV 2-3-99
Printed by: Lacosta Printing Press
Tagudin, Cebu City
Christine D. Lapinid
Amount
Signature
Fifteen thousand pesos only
in full/partial of
merchandise ordered.
GLOBAL HOME DEPOT, INC.50 Bklts. 001.2,500
Cebu City Government
GLOBAL HOME DEPOT, INC.Ground Floor, The Columbia Tower,
A.S. Fortuna Street, Mandaue City, Cebu
TIN - 020-156-885-736 NV
Customer Name Date Phone
Address
City State ZIP
Ship to Address
City State ZIP
Special Instructions
Item Number
Order Taken by
Sales OrderMandaue City 01/15/14
Description Quantity Unit Price Extended Price
Angle Iron (Rolled Angles) 300 20.00 6,000.00
Angle Iron (Flat Angles) 250 16.00 4,000.00
Gross Total 8,928.57
Tax 1,071.43
Shipping
Labor
Total Due 10,000.00
Ground Floor, The Columbia Tower,
A.S. Fortuna Street, Mandaue City, Cebu
No. 00001291
Name Name
Company
Street
Date 01/17/14 City, State
Dept Acct Zip Code
Number Weight
of (Subject
Packages to Change)
GLOBAL HOME DEPOT, INC. Bill of Lading
FROM TO
GLOBAL HOME DEPOT, INC. Mandaue City
Kind of Package
Serial NumbersDescription of Articles
Special Marks, and Exceptions
Angle Iron (Rolled Angles)
Angle Iron (Flat Angles)
Sold To: Bill To:
Quantity Amount
300 6,000.00
250 4,000.00
SUB TOTAL 8,928.57
TAX 1,071.43
TOTAL DUE 10,000.00
Customer Mandaue City
Date Terms P.O. Number
Description Unit Price
Angle Iron (Rolled Angles)
Angle Iron (Flat Angles)
20.00
16.00
01/19/14
In payment of Invoice(s)
No.
10001291 P 10,000.00
OFFICIAL RECEIPT NO. 021-914
Date 02/19/14
Received from
TOTAL P 10,000.00 Address
CASH 10,000.00 the sum of
BANK/CHECK NO (P 10,000.00 )
SUB-TOTAL P 8,928.57
TAX 1,071.43
TOTAL DUE P 10,000.00
Permit No. RD2-02-093 NV 2-3-99
Printed by: Lacosta Printing Press Christine D. Lapinid
Tagudin, Cebu City Signature
Ten thousand pesos only
in full/partial of
merchandise ordered.
50 Bklts. 001.2,500 GLOBAL HOME DEPOT, INC.
GLOBAL HOME DEPOT, INC.Amount Ground Floor, The Columbia Tower,
A.S. Fortuna Street, Mandaue City, Cebu
TIN - 020-156-885-736 NV
Mandaue City
Customer Name Date Phone
Address
City State ZIP
Ship to Address
City State ZIP
Special Instructions
Item Number
Order Taken by
Sales OrderGlobal Holidays 06/03/14
Description Quantity Unit Price Extended Price
Backer Rod - Poli Void 193 77.72 15,000.00
Backer Rod - Denver Foam 209 47.85 10,000.00
Gross Total 22,321.43
Tax 2,678.57
Shipping
Labor
Total Due 25,000.00
Ground Floor, The Columbia Tower,
A.S. Fortuna Street, Mandaue City, Cebu
No. 00006054
Name Name
Company
Street
Date 06/05/14 City, State
Dept Acct Zip Code
Number Weight
of (Subject
Packages to Change)
GLOBAL HOME DEPOT, INC. Bill of Lading
FROM TO
GLOBAL HOME DEPOT, INC. Global Holidays
Kind of Package
Serial NumbersDescription of Articles
Special Marks, and Exceptions
Backer Rod - Poli Void
Backer Rod - Denver Foam
Sold To: Bill To:
Quantity Amount
193 15,000.00
209 10,000.00
SUB TOTAL 22,321.43
TAX 2,678.57
TOTAL DUE 25,000.00
GLOBAL HOME DEPOT, INC. INVOICEGround Floor, The Columbia Tower, No. 10006054
A.S. Fortuna Street, Mandaue City, Cebu
Customer Global Holidays
Date Terms P.O. Number
Description Unit Price
Backer Rod - Poli Void
Backer Rod - Denver Foam
77.72
47.85
06/07/14
In payment of Invoice(s)
No.
10006054 P 25,000.00
OFFICIAL RECEIPT NO. 070-714
Date 07/07/14
Received from
TOTAL P 25,000.00 Address
CASH 25,000.00 the sum of
BANK/CHECK NO (P 25,000.00 )
SUB-TOTAL P 22,321.43
TAX 2,678.57
TOTAL DUE P 25,000.00
Permit No. RD2-02-093 NV 2-3-99
Printed by: Lacosta Printing Press Christine D. Lapinid
Tagudin, Cebu City Signature
Twenty thousand pesos only
in full/partial of
merchandise ordered.
50 Bklts. 001.2,500 GLOBAL HOME DEPOT, INC.
GLOBAL HOME DEPOT, INC.Amount Ground Floor, The Columbia Tower,
A.S. Fortuna Street, Mandaue City, Cebu
TIN - 020-156-885-736 NV
Global Holidays
Customer Name Date Phone
Address
City State ZIP
Ship to Address
City State ZIP
Special Instructions
Item Number
Order Taken by
Labor
Total Due 20,000.00
Gross Total 17,857.14
Tax 2,142.86
Shipping
Penn Sand (White) 321 24.92 8,000.00
Description Quantity Unit Price Extended Price
Cup Stones 213 56.34 12,000.00
Sales OrderEdana Costruction 08/13/14
Ground Floor, The Columbia Tower,
A.S. Fortuna Street, Mandaue City, Cebu
No. 00008154
Name Name
Company
Street
Date 08/15/14 City, State
Dept Acct Zip Code
Number Weight
of (Subject
Packages to Change)
Kind of Package
Serial NumbersDescription of Articles
Special Marks, and Exceptions
Cup Stones
Penn Sand (White)
GLOBAL HOME DEPOT, INC. Bill of Lading
FROM TO
GLOBAL HOME DEPOT, INC. Edana Costruction
Sold To: Bill To:
Quantity Amount
213 12,000.00
321 8,000.00
SUB TOTAL 17,857.14
TAX 2,142.86
TOTAL DUE 20,000.00
08/17/14
Description Unit Price
Cup Stones
Penn Sand (White)
56.34
24.92
Customer Edana Costruction
Date Terms P.O. Number
GLOBAL HOME DEPOT, INC. INVOICEGround Floor, The Columbia Tower, No. 10008154
A.S. Fortuna Street, Mandaue City, Cebu
In payment of Invoice(s)
No.
10008154 P 20,000.00
OFFICIAL RECEIPT NO. 091-714
Date 09/17/14
Received from
TOTAL P 20,000.00 Address
CASH 20,000.00 the sum of
BANK/CHECK NO (P 20,000.00 )
SUB-TOTAL P 17,857.14
TAX 2,142.86
TOTAL DUE P 20,000.00
Permit No. RD2-02-093 NV 2-3-99
Printed by: Lacosta Printing Press Christine D. Lapinid
Tagudin, Cebu City Signature
Twenty thousand pesos only
in full/partial of
merchandise ordered.
50 Bklts. 001.2,500 GLOBAL HOME DEPOT, INC.
GLOBAL HOME DEPOT, INC.Amount Ground Floor, The Columbia Tower,
A.S. Fortuna Street, Mandaue City, Cebu
TIN - 020-156-885-736 NV
Edana Costruction
Customer Name Date Phone
Address
City State ZIP
Ship to Address
City State ZIP
Special Instructions
Item Number
Order Taken by
Sales OrderAST Builders 03/17/14
Description Quantity Unit Price Extended Price
Stainless Hinge (Ruby) 225 80.00 18,000.00
Stainless Hinge (Gold) 200 60.00 12,000.00
Gross Total 26,785.71
Tax 3,214.29
Shipping
Labor
Total Due 30,000.00
Ground Floor, The Columbia Tower,
A.S. Fortuna Street, Mandaue City, Cebu
No. 00003194
Name Name
Company
Street
Date 03/19/14 City, State
Dept Acct Zip Code
Number Weight
of (Subject
Packages to Change)
GLOBAL HOME DEPOT, INC. Bill of Lading
FROM TO
GLOBAL HOME DEPOT, INC. AST Builders
Kind of Package
Serial NumbersDescription of Articles
Special Marks, and Exceptions
Stainless Hinge (Ruby)
Stainless Hinge (Gold)
Sold To: Bill To:
Quantity Amount
225 18,000.00
200 12,000.00
SUB TOTAL 26,785.71
TAX 3,214.29
TOTAL DUE 30,000.00
GLOBAL HOME DEPOT, INC. INVOICEGround Floor, The Columbia Tower, No. 10003194
A.S. Fortuna Street, Mandaue City, Cebu
Customer AST Builders
Date Terms P.O. Number
Description Unit Price
Stainless Hinge (Ruby)
Stainless Hinge (Gold)
80.00
60.00
03/21/14
In payment of Invoice(s)
No.
10006054 P 30,000.00
OFFICIAL RECEIPT NO. 042-114
Date 04/21/14
Received from
TOTAL P 30,000.00 Address
CASH 30,000.00 the sum of
BANK/CHECK NO (P 30,000.00 )
SUB-TOTAL P 26,785.71
TAX 3,214.29
TOTAL DUE P 30,000.00
Permit No. RD2-02-093 NV 2-3-99
Printed by: Lacosta Printing Press Christine D. Lapinid
Tagudin, Cebu City Signature
Thirty thousand pesos only
in full/partial of
merchandise ordered.
50 Bklts. 001.2,500 GLOBAL HOME DEPOT, INC.
GLOBAL HOME DEPOT, INC.Amount Ground Floor, The Columbia Tower,
A.S. Fortuna Street, Mandaue City, Cebu
TIN - 020-156-885-736 NV
AST Builders
DEPOSIT SLIP
PLEASE CHECK THE APPROPRIATE BOXES DATE:
____X__ DEPOSIT ______ PAYMENT CURRENCY
_______ SAVINGS _______ CURRENT __X_ PESO ___ US DOLLAR ___ OTHERS
ACCOUNT NUMBER 1 5 7 2 1 8 9 6 1 4
DEPOSITOR'S NAME GLOBAL HOME DEPOT, INC.
1 5 0 0 0 0 0
1 5 0 0 0 0 0
VALIDATED: Angie C. Bucos
TELLER 1
BPIDEPOSIT SLIP
(Bank's Copy)
TYPE OF DEPOSIT
CASH
April 21, 2014
CHECK (S)
TOTAL DEPOSITS
AMOUNTS
TELLER'S VALIDATION
PLEASE CHECK THE APPROPRIATE BOXES DATE:
___X___ DEPOSIT ______ PAYMENT CURRENCY
_______ SAVINGS _______ CURRENT _X__ PESO ___ US DOLLAR ___ OTHERS
ACCOUNT NUMBER 1 5 7 2 1 8 9 6 1 4
DEPOSITOR'S NAME GLOBAL HOME DEPOT, INC.
3 0 0 0 0 0 0
3 0 0 0 0 0 0
VALIDATED: Angel M. Gio
Teller 3
BPIDEPOSIT SLIP
(Bank's Copy)
TYPE OF DEPOSIT
CASH
March 21, 1014
CHECK (S)
TOTAL DEPOSITS
AMOUNTS
TELLER'S VALIDATION
The clients provided you with s unadjusted trial balance for the year ended December 31, 2014.
Global Home Depot, Inc.
Trial Balance
December 31, 2014
Debit Credit
Cash in Bank 885,670.75
Petty Cash Fund 20,000.00
Change Fund 10,000.00
BSP Treasury Bills 50,000.00
BDO Time Deposit 65,000.00
Trading Securities 10,000.00
Accounts Receivable 650,723.75
Allowance for Doubtful Accounts
25,504.00
Advances to Suppliers 43,458.50
Advances to Employees 6,200.00
Inventory 544,279.75
Prepaid Taxes 1,248.50
Office Furnitures and Fixtures 145,752.00
Accumulated Depreciation - Office Furnitures and Fixtures
35,426.50
Office Equipment 231,489.75
Accumulated Depreciation - Office Equipment
56,478.25
Delivery Truck 350,248.00
Accumulated Depreciation - Delivery Truck
89,652.25
Leasehold Improvements 15,426.00
Accumulated Depreciation - Leasehold Improvements
5,764.00
Bond Sinking Fund 120,000.00
Building Construction Fund 150,000.00
Accounts Payable - South Home Depot
132,625.75
Accounts Payable - HJR Builders
102,745.50
Accounts Payable - Universal Home Builders
161,431.75
Accrued Expenses
105,482.50
SSS Contributions Payable
9,963.25
Pag-IBIG Contributions Payable
5,000.00
Income Tax Payable
12,548.00
PHIC Contributions Payable
10,489.50
Loans Payable
85,465.50
Bonds Payable
150,000.00
Paid-up Capital
2,500,000.00
Accumulated Earnings
125,438.50
Sales
6,428,655.25
Sales Return 15,623.50
Purchases 5,654,328.25
Purchase Returns
12,548.50
Interest Income
8,245.50
Miscellaneous Income
23,615.00
SSS Contributions 119,559.00
Pag-IBIG Contributions Payable 60,000.00
PHIC Contributions 125,874.00
Rent Expense 120,000.00
Interest Expense 30,200.75
Salaries and Wages 260,525.50
Advertising 13,652.50
Depreciation 15,863.50
13th Month Pay 30,043.75
Doubtful Accounts Expense 3,856.25
Taxes and Licenses 11,105.50
Supplies Expense 15,569.00
Christmas Party 32,402.00
Representations 5,500.00
Meetings/Seminars 75,642.50
Utilities 26,580.75
Transportation 18,245.25
Repairs and Maintenance 25,258.50
Insurance 24,548.75
Communications 16,569.25
Income Tax Expense 36,598.75
Audit Fees 24,245.50
Miscellaneous Expenses 25,789.75
10,087,079.50 10,087,079.50
You started your substantive testing with the following accounts:
CASH AND CASH EQUIVALENTS
The following are composition of cash and cash equivalent:
Cash in bank – Metrobank Account #1508-9456-15 256,389.50
Cash in bank – BPI Account # 1647-9845-12 489,622.00
Cash in Bank – BPI Account # 1572-1896-14 14,659.25