George Laundry Company
George Laundry Company
George Laundry Company is in retailing laundry supplies. The company kept very
limited records and most of the company’s transactions are summarized in cash
records. George Laundry Company presented you the following information, in line
with your audit:
Total cash receipts from customers, based on cash records P 576,000
Proceeds from a bank loan (note payable-non trade) 100,000.00
Total cash payments to suppliers, based on cash records 299,000.00
Total cash payments for other operating expenses 144,000.00
Credit memos issued, for returns and allowances 50,000.00
Total refund for goods received as returns, based on cash records 25,000.00
Sales discount 40,000.00
Credit memos received, for returns 45,000.00
Total refund for goods returned to suppliers, based on cash records 15,000.00
Purchase discounts 30,000.00
Further investigation revealed the following:
Decrease in accounts receivable P 150,000
Increase in accounts payable 200,000.00
Increase in notes receivable 50,000.00
Increase in notes payable-trade and non-trade 10,000.00
Accounts written off during the year 25,000.00
Cash recovered from previous write-offs 5,000.00
Increase in merchandise inventory 131,000.00
Compute for the following:
1. Accrual basis gross sales
2. Accrual basis gross purchases
3. Accrual basis net purchases
4. Correct net sales
5. Correct cost of sales
6. Correct gross profit