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LARES Company
Working Balance Sheet
December 31, 2005
Per Books
Adjustments
Per Audit
Assets
Current assets
Cash
Accounts receivable
132,700
442,500
238,500
61 to 90 days
Over 90 days
Allowance for doubtful accounts
117,200
85,400
(15,000)
Interest receivable
Advances to officers and employees
Inventory
TOTAL
Non-current assets
Available for sale securities
Investment in Associate
Equipment
Accumulated depreciation
TOTAL
TOTAL
Current Liabilities
Accounts payable
Accrued expenses
Bank overdraft
Customers' credit balance
Interest payable
367,200
596,000
-
705,000
(481,000)
143,400
403,400
205,800
133,200
64,400
(7,942)
6,000
19,000
384,800
948,658
17
18
18
19
20
21
23
24
25
(6,000)
(490,000)
490,000
10,000
50,000
(34,000)
(40,000)
(55,000)
(5,000)
100,000
23
24
26
30,000
60,000
20,000
(371,000)
516,000
605,000
820,000
850,000
1,747,400
1,798,658
168,175
28,600
196,775
416,000
-
Total liabilities
416,000
612,775
Stockholders equity:
Common stock, P10 par
Stock dividends distributable
Additional paid-in capital
670,000
80,000
TOTAL
(5,200)
35,000
(500)
(16,000)
(2,600)
16,000
(12,000)
(1,200)
(18,000)
(1,500)
15,000
(16,400)
(21,000)
(12,000)
(1,200)
(18,000)
(1,500)
16,000
(21,000)
(15,000)
21,000
1,058
6,000
2,600
16,400
13,000
1,600
(14,000)
17,000
927,400
Noncurrent Liabilities
Bonds payable
Discount on bonds payable
Retained earnings
Treasury stock
1
2
3
4
5
4
6
7
8
9
10
11
12
6
7
8
9
4
12
10
12
13
22
5
11
8
14
15
16
2
16
27
35,000
17,000
32,000
29
48,000
28
28
30
(16,000)
(24,000)
773
220,175
60,600
48,000
328,775
400,000
(23,227)
376,773
705,548
31
32
31
32
384,625
17
(20,000)
64,500
20,000
32,250
from WPL
(6,000)
650,000
64,500
132,250
252,360
(6,000)
1,134,625
1,093,110
1,747,400
1,798,658
2 of 7
3 of 7
LARES Company
Working Profit and Loss
For the year ended December 31, 2005
Net sales
Per Books
1,053,500
Cost of sales
525,400
Gross profit
528,100
Other income
42,450
Investment income
Total
570,550
Expenses
Operating expenses
276,900
Other expenses
Finance cost
6
7
8
8
14
15
(12,000)
(1,200)
(18,000)
(13,000)
(1,600)
14,000
Per Audit
1,022,300
524,800
497,500
21
22
24
20
(34,000)
6,000
5,000
50,000
19,450
50,000
566,950
1
3
9
13
25
26
27
23
28
29
30
5,200
500
1,500
(1,058)
5,000
(20,000)
32,000
10,000
(40,000)
48,000
773
300,042
10,000
8,773
276,900
318,815
293,650
248,135
90,975
384,625
19
32
10,000
(96,750)
to WBS
100,975
(96,750)
252,360
4 of 7
LARES Company
Summary of Adjusting Journal Entries
December 31, 2005
DEBIT
1 Operating expenses
Cash
Unreplenished vouchers (6,400-1,200)
5,200
5,200
4,800
2 Cash
Accounts Payable
Unreleased check
35,000
35,000
500
500
16,000
16,000
Unadjusted balances
Bank service charge
Post dated check
Outstanding checks
Undeposited collections
Corrected balances
Unlocated difference - cash shortage
Adjusted balances
2,600
2,600
3
4
Book
137,700
(500)
(16,000)
121,200
(2,600)
118,600
6 Net sales
Accounts receivable (<60 days)
Unrecorded credit memo
12,000
7 Net sales
Accounts receivable (<60 days)
Unrecorded employee discount
1,200
8 Net sales
Accounts receivable (<60 days)
18,000
Inventory
Cost of sales
Goods out on consignment erroneously billed
9 Operating expenses
Accounts receivable (<60 days)
Unrecorded freight-out
CREDIT
Bank
124,200
(14,100)
8,500
118,600
118,600
12,000
1,200
18,000
13,000
13,000
1,500
1,500
10 Accounts receivable
Allowance for doubtful accounts
Erroneous recording of recovery from written off account
15,000
16,400
15,000
16,400
5 of 7
LARES Company
Summary of Adjusting Journal Entries
December 31, 2005
DEBIT
12 Allowance for doubtful accounts
Accounts receivable (>90 days)
Accounts that should be written off
13 Allowance for doubtful accounts
Operating expenses
21,000
21,000
1,058
1,058
1,600
14,000
16 Inventory
Accounts payable
Unrecorded purchases, FOB shipping point
17,000
18 Investment in Associate
Available for sale securities
Reclassification of AFS to Investment in Associate
14,000
17,000
6,000
6,000
490,000
490,000
19 Investment in Associate
Retained earnings, beg (100,000 x 10%*)
Retroactive application of equity method; *(34,000/170,000 x 1/2)
10,000
20 Investment in Associate
Investment income (250,000 x 20%)
50,000
34,000
22 Interest Receivable
Other income (Interest income) (P100,000 x 12% x 6/12)
2,058
2,664
3,220
7,942
9,000
1,058
1,600
15 Cost of sales
Inventory
Goods on consignment presumed included in physical count
17 Treasury stock
Available for sale securities
CREDIT
10,000
50,000
34,000
6,000
6,000
10,000
30,000
24 Accumulated depreciation
Equipment
Other income (Gain on disposal of assets)
60,000
40,000
55,000
5,000
6 of 7
LARES Company
Summary of Adjusting Journal Entries
December 31, 2005
DEBIT
25 Operating expenses
Equipment
26 Accumulated depreciation
Operating expenses
5,000
5,000
20,000
20,000
106,000
2,500
5,000
7,500
121,000
141,000
20,000
27 Operating expenses
Accrued expenses
32,000
28 Bonds payable
Discount on bonds payable [400,000 - (416,000 - 40,000)]
Finance Cost (Interest expense) (400,000 x 12% x 10/12)
16,000
24,000
48,000
32,000
40,000
48,000
773
773
31 Common stock
Additional paid-in capital [10,000 x (12-10)]
CREDIT
8,773
8,000
773
20,000
20,000
A
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
38,700
4,000
36,000
1,800
40,100
2,750
3,840
13,000
1,375
15,400
100
111,904
990,000
346,000
566,000
677,904
600
2,800
2,800
397,000
37,000
400,000
311,102
125,104
944,000
669,600
280,400
270,798
23,602
5,000
6,500
16,352
1,000
1,000
1,000
B
35,002
4,500
40,000
2,000
38,000
1,000
10,750
250
20,000
500
113,302
1,910,000
344,000
1,566,000
713,950
4,000
4,000
5,200
400,000
3,000
405,200
200,000
108,750
948,000
665,000
282,400
264,798
15,000
7,250
9,000
11,000
2,250
4,000
500
C
34,402
5,000
42,000
2,100
40,000
500
2,840
8,500
1,125
24,600
113,950
910,000
350,000
606,000
679,302
5,200
5,200
4,000
363,000
43,000
363,000
108,750
111,102
950,000
661,000
285,000
270,000
17,602
5,500
6,000
17,000
1,750
3,000
2,000
D
35,502
5,500
38,000
1,900
39,900
1,000
3,740
4,250
16,000
900
112,802
940,000
356,000
584,000
678,802
2,800
1,200
1,200
360,000
40,000
368,200
308,750
94,750
952,000
664,400
287,000
264,000
18,400
7,750
3,000
14,000
1,500