Grace Corp 2024

INDEPENDENT AUDITORS REPORT
To Mr. Alfredo Cacho, President, and

To Stockholders and Board of Directors
GRACE CORPORATION
Report on the Financial Statements
Grace Corporation’s financial statements, which include the balance sheet as of December 31,
2021, as well as the income statement, statement of changes in equity and cash flow statement
for the year then ended, as well as the summary of significant accounting policies and other
explanatory notes have been audited.
Management Responsibility for the Financial Statements
The preparation and fair presentation of these financial statements I conformity with Philippine
Financial Standards is the responsibility of management. Designing, implementing and
maintaining internal control related to the preparation and fair reporting of financial statements
that are free of substantial misstatement whether due to fraud or error is part of the obligation of
the management.
Auditors Responsibility
Based on our audit, it is our job to provide an opinion on these financial statements. Our audit
was carried out in compliance with the Philippine Auditing Standard. These standards demand
that we follow ethical guidelines and plan and conduct the audit in such a way that we can have
reasonable assurance that the financial statements are free of substantial misrepresentation.
An audit entails following procedure to collect audit evidence about the financial statements’
quantities and disclosures. The processes chosen are based on the auditor’s judgment, which
includes an assessment of the risk of major financial statement falsification, whether due to
fraud or error. Internal control is considered important to the preparation and fair presentation of
financial statement by the auditors to develop audit procedures that are appropriate in the
circumstances but not for the purpose of giving an opinion on the entity’s internal control
effectiveness. An audit also includes assessing the validity of accounting policies applied and
the reasonableness of the management, as well as assessing the financial statements’ overall
presentation.
We feel the audit evidence we’ve gathered is sufficient and appropriate for us to base our audit
conclusion on.
1
Opinion
According to the Philippine Financial Reporting Standards, the financial statement portrays the
financial condition of Grace Corporation as of December 31, 2021, as well as its financial
performance and cash flows for the year then ended, fairly in all relevant aspects.
Roces, Adriano & Salas CPAs

CPA Certificate No. 0910078
March 31, 2021
Makati City, Philippines
2
GRACE CORPORATION
Statement of Financial Position
as of December 31, 2021
ASSETS 2021 2020

Current Assets
₱
Cash 14,232,159.00 ₱ 1,100,000.00
Trade and Other Receivables - net 12,983,594.50 13,750,000.00
Marketable Securities
2,545,000.00 1,150,000.00
Short-Term Investments 6,500,000.00 -
Merchandise Inventory 4,078,740.00 900,000.00
Prepaid Expenses 2,482,740.00 500,000.00
₱
Total Current Assets 42,822,233.00 ₱ 17,400,000.00
Non-current Assets
₱
Property and Equipment - net 76,037,427.00 ₱ 57,063,720.00
₱
Total Non-current Assets 76,037,427.00 ₱ 57,063,720.00
₱
TOTAL ASSETS 118,859,402.50 ₱ 74,463,720.00
LIABILITIES AND EQUITY

Liabilities
₱
Trade and Other Payables 22,268,612.00 ₱ 22,450,500.00
Loans Payable 10,000,000.00 -
Income Tax Payable 4,908,816.00 1,053,816.00
₱
Total Liabilities 37,177,428.00 ₱ 23,504,316.00
Shareholder's Equity
Ordinary Share Capital ₱ 70,000,000.00 ₱ 45,000,000.00
Subscribes Ordinary Share Capital 5,000,000.00 -
Subscription Receivable - 2,125,000.00 -
Premium in excess of Par 5,250,000.00 3,500,000.00
Retained Earnings 4,364,249.50 2,459,404.00
₱
Total Shareholder's Equity 82,489,249.50 ₱ 50,959,404.00
TOTAL LIABILITIES AND ₱

SHAREHOLDER'S EQUITY 118,859,402.50 ₱ 74,463,720.00
3
GRACE CORPORATION
Statement of Comprehensive Income
for the year ended December 31,2021
2021 2020
Income
Net Sales ₱ 112,683,040.00 ₱ 53,439,000.00
Other Income 1,961,209.00 110,000.00
₱ 114,644,249.00 ₱ 53,549,000.00
Expenses
Cost of Sales ₱ 56,971,192.00 ₱ 34,785,500.00
General and Administrative Expense 37,828,135.00 11,779,500.00
Distribution Expense 2,783,520.00 1,150,000.00
Interest Expense 131,141.00 445,500.00
Other Expenses 567,541.00 70,000.00
₱ 98,281529.00 ₱ 48,230,500.00
Income Before Tax ₱ 16,362,720.00 ₱ 5,318,500.00

Income Tax Expense 4,908,816.00 1,595,400.00
Net Income ₱ 11,453,904.00 ₱ 3,723,100.00
Other Comprehensive Income - -
Total Comprehensive Income ₱ 11,453,904.00 ₱ 3,723,100.00
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52,781,456.00
10,721,915.00
29,125,000.00
₱ 92,628,371.00
GRACE CORPORATION
Total
Statement of Cash Flows
December 31, 2021
-
Share Premium Retained Earnings
4,281,456.00
10,721,915.00
₱ 15,003,371.00
CASH FLOW FROM OPERATING ACTIVITIES
Income before Tax P 14,408,880.79
-
-
-
Adjustments
3,500,000.00
1,750,000.00
₱ 5,250,000.00
Depreciation 4,373,436.33
Interest Expense 114,830.00
Gain on Sale of Securities (1,026,000.00)

-
-
-
Statement of Changes in Equity
5,000,000.00 - 2,625,000.00
5,000,000.00 -₱ 2,625,000.00
Subscription
Interest Income (894,873.33)

Receivable
December 31, 2018
Grace Corporation
Dividend Income (40,000.00)
Accrued Expenses 665,500.00

-
-
-
-
Ordinary Share Subscribed Ordinary
Share Capital
Operating Income before working capital changes P 17,601,773.79

₱
-
-
-
-
45,000,000.00
25,000,000.00
₱ 70,000,000.00
Changes in operating assets and liabilities

Capital
Decrease/(Increase) in:
Receivables 765,027.67
-
-
Inventories (3,237,765.91)
Prepaid Assets (1,990,000.00)

December 31, 2018
Issuance of Share
Increase/(Decrease) in:
Cash Dividends
January 1, 2018
Net Income
Trade and other payables (1,259,375.88)
5
OCI
Cash generated from operations 11,879,659.67
Income Tax Paid (1,053,816.00)
Cash Provided by operating activities P 10,825,843.67
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to
Property and Equipment (20,000,000.00)
Short-term Investments (12,080,000.00)
Proceeds for the sale of securities 1,976,000.00
Cash used by investing activities P (30,104,000.00)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from borrowings 7,900,000.00
Issuance of shares 29,625,000.00
Cash provided by financing activities P 37,525,000.00
Net Increase in Cash 18,246,843.67
Adjustments (5,114,684.67)
Cash, January 1,2011 1,100,000.00
Cash, December 31,2018 P 14,232,159.00
ENGAGEMENT LETTER
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January 5, 2022
Alfredo Cacho
Chairman of Grace Corporation
12 Ninoy Aquino Avenue, Parañaque City, Philippines
Dear Sir:
This engagement letter confirms the terms and conditions upon which Roces Adriano & Salas
CPAs has been engaged to audit and report on the financial statements of the GRACE
CORPORATION (the “Company”) for the year ending December 31, 2021. The services
described in this agreement may hereafter be referred to as either the “Audit Services” or the
“Services”
Should conditions not now anticipated preclude us from completing out audit and issuing your
auditors report (the “Report”) as contemplated by this Agreement, we will advise you and those
charged with governance promptly and takes such action as we deem appropriate.
Audit Responsibilities and Limitations
We will conduct the audit in accordance with the Philippine Standards on Auditing (PSA’s), as
promulgated by the Auditing and Assurance Council. Those standards require that we are
independent and that we fulfill our other ethical responsibilities that are relevant to out audit.
The objectives of our audit are to obtain reasonable assurance about whether the financial
statement is free from material misstatement, whether due to fraud or error, and to express an
opinion whether the financial statements present fairly, in all material respects, the financial
position, financial performance and cash flows of the company in accordance with Philippine
Financial Reporting Standards (“PFRS”)
Reasonable assurance is a high level of assurance, but it is not guarantee that an audit
conducted in accordance with PSA’s will always detect a material misstatement when it exists.
Misstatements can arise from fraud error and are considered material if individually or in the
aggregate, they could reasonably be expected to influence the economic decisions of users
taken based on these financial statements.
As part of an audit in accordance with PSA’s, we exercise professional judgment and maintain
professional skepticism throughout the audit. We also identify and assess the risk of material
misstatement of the financial stamen, whether due to fraud or error, design and perform audit
procedures responsive to those risk, and obtain audit evidence that is sufficient and appropriate
to provide a basis of our opinion
There are inherent limitations in the audit process, including, for example the judgment and
selective testing data and the possibility that collusion, forgery, intentional omissions,
misrepresentations, or the override of internal control, may preclude the detection of material
error, fraud or non-compliance with laws and regulation. Accordingly, there is some risk that a
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material misstatement of the financial statements may remain undetected. Also, an audit is not
designed to detect fraud error that is immaterial to the financial statements.
When we become aware of identified or suspected non-compliance with laws and regulations,
including fraud, we will bring such matters to the attention of the appropriate level of
management. If we become aware of fraud involving management or fraud involving employees
who have significant roles in internal control, we will report this matter directly to those charged
with governance. We will communicate with those charged with governance matters involving
non-compliance with laws and regulations, including fraud that comes to our attention unless
they are clearly inconsequential. However, we will not communicate non-compliance matters,
including fraud to the extent we are prohibited to do so by law or regulation.
We will communicate in writing significant deficiencies in internal control identified during the
audit of the Company’s financial statements. We may also communicate our observations as to
the potential for economies in, or improved controls over, the Company’s operations
Management Responsibilities and Representations
Our audit will be conducted on the basis that management and where appropriate, those
charged with governance, acknowledge and understand that they have responsibility:
A.) For the preparation and fair representation of the financial statements in accordance
with PFRS.
B.) For such internal control as management determines is necessary to enable the
preparation of the financial statements that are free from material misstatement,
whether due to fraud or error
C.) To provide us with: (1) access on a timely basis to all information of which
management is aware that is relevant to the preparation of the financial statements
such as records, documentation and other matters;(2) additional information that we
may request from management for the purpose of audit;(3)unrestricted access to
persons within the company from whom we determine it necessary to obtain audit
evidence;(4) as provided under Circular No. 2015-40, provide us with copies of the
IC Reports of Examination
Managements failure to provide us with the information referred to above or access to persons
within the company may cause us to delay our Report, modify our procedure, or even terminate
our agreement
Management is also responsible for adjusting the financial statements to correct the
misstatements identified by us and for affirming to us in its representation letter that they believe
the effects of unrecorded misstatements are immaterial, individually and in aggregate, to the
financial statements.
Management is responsible, with the oversight of those charged with governance, to determine
that the company’s business activities are conducted in accordance with laws and regulations. It
is also the responsibility of management and those charged with governance to identify and
address any non-compliance with applicable laws and regulation. Management is responsible
8
for communicating to us on a timely basis to the extent that the management or those charged
with governance are aware, all instance of identified or suspected non-compliance with laws
and regulations (a) involving financial improprieties, (b) having a direct effect on the
determination of material amounts and disclosures in the Company’s financial statements
and/or (c) that do not have direct effect on amounts and disclosures in the financial statements,
but compliance with which may be fundamental to the operations of the Company’s business, its
ability to continue its business, or to avoid material penalties. Management must communicate
the foregoing instances regardless of the source or the form in which the instances of identified
or suspected non-compliance may have been discovered or communicated to them (including
without limitations, instances identified by “Whistle Blowers”, employees, former employees,
analysts, regulators or others) and provide us full access to information and any internal
investigations related to them. Such Instances include manipulation of financial results by
management or employees, misappropriation of assets by management or employees,
intentional circumvention of internal controls, inappropriate influence on related party
transactions by related parties intentionally misleading Roces Adriano & Salas CPA’s, or other
identifies or suspected non-compliance with law and regulation, including fraud that could result
in a misstatement of the financial statements or otherwise affect the financial reporting of the
Company. If the company limits the information otherwise available to us, the company will
immediately inform us of the fact that certain information’s is being withheld to us. Any such
withholding of the information could be considered a restriction on the scope of the Audit and
may prevent us from opinion on the Company’s financial statements; alter the form of Report we
may issue on such financial statements; otherwise affect our ability to continue as the
company’s independent auditors. We will disclose any such withholding of information to those
charged with governance.
We appreciate the opportunity to be of assistance of the Company. If this agreement accurately

reflects the terms on which the company has agreed to engage us, please sign below on behalf
of the Company and return it to Mark Jhones Bagaas, Roces Adriano & Salas CPA’s; 307 ABC
Building Ayala Avenue., Makati City.
Yours truly,
Mark Jhones Bagaas

Partner
For and on behalf of Roces Adriano & Salas CPAs
Agreed and accepted by:
Alfredo Cacho
President
Grace Corporation
9
REPRESENTATION LETTER
March 31, 2022
To: GRACE CORPORATION
This representation letter is being sent in connection with your audit of Grace Corporation’s
financial statements for the year ended December 31, 2021, with the goal of expressing an
opinion on whether the financial statements are presented fairly in all material respects, in
accordance with Philippine Financial Reporting Standards.
We can attest to this (to the best of our knowledge and belief, having made such inquiries we
considered necessary for the purpose of appropriately informing ourselves)
Financial Statements
 In line with the terms of audit engagement dated April 30, 2022, we have completed our
duties for the production and presentation of the financial statements and the financial
statements are honestly presented in compliance with Philippine Financial Reporting
Standards.
 All significant assumptions, including those utilized to calculate fair value are reasonable.
 Related party transactions and connections have been properly accounted for and
declared in line with Philippine Financial Reporting Standards.
 All events that occurred after the financial statements were issued and that required
adjustments or disclosures under Philippine Financial Reporting Standards have been
adjusted or disclosed.
 The financial statements are unaffected by uncorrected misstatements both individually
and in aggregate. The representation letter includes a list of the uncorrected
misstatements.
Information Provided
 We’ve given you the following:

o All records and documents as well as other items that are relevant to the
creation and presentation of financial accounts.
o Additional information that you’ve requested.
o Unrestricted access to those within the entity.
 All transactions have been recorded in the accounting records and are reflected in the
financial statements.
 We’ve told you about the findings of our risk assessments of the financial statements
being materially misstated as a result of fraud.
 We have given you all the information we have on fraud or suspected fraud that we are
aware of and that affects the entity including:
o Administration
o Employees with major internal control responsibilities; and
10
o Others where the fraud could have material effect on the financial
statements.
 We’ve told you everything we know about claims of fraud or suspected fraud, influencing
the entity’s financial statements as reported by employees, former workers, analysts,
regulators and others.
 We have informed you of all known or suspected instances of non-compliance with laws
and regulations that should be considered when drafting the financial statements.
 We have informed you of the entity’s related parties’ identities as well as all related party
interactions and transactions that we are aware of.
________________________
Sgd. Chief Executive Officer
________________________
Sgd. Chief Financial Officer
11
GRACE CORPORATION
AUDIT OF CASH
For the year ended December 31, 2021
Assertions Audit Objectives Audit Procedures
I. Existence or A. To determine whether 1. Obtain analysis of

occurrence cash exists at the cash balance and
year-end and cash- reconcile to the
related transactions general ledger
occur within the year. 2. Confirm bank
B. To determine that all balances as of the
cash balances of the statement of financial
client are reflected on position date.
the statement of 3. Perform cash count
financial position at procedures for cash
year-end. on hand.
4. Obtain (prepare) bank
reconciliations as of
the statement of
financial position.
5. Trace all transfers
occurring between
banks near year-end.
II. Completeness C. To determine whether 6. Obtain a cutoff bank
all cash transactions statement containing
are recorded in the transactions several
proper accounting days subsequent to
period. the statement of
financial position date.
Examine items
returned with the
cutoff bank
statements.
7. Prepare proof of cash
and reconcile cash
transactions occurring
during a specified
period as they are
recorder by the bank
and the client.
8. Verify the client’s
cutoff cash receipts
and cash
disbursements.
III. Rights and D. To determine that 9. Review bank
Obligations cash balances are statements and the
available for use bank replies to
12
without restrictions, confirmation letters.
properly indicated in
the Statement of
Financial Position.
IV. Valuation or E. To determine if the 10. Verify existence of
Allocation cash is recorded and cash bank under
presented at the receivership, cash
proper amount. subject to courts.
Restraining order, in
foreign banks and in
foreign currency. This
is in addition to the
foregoing procedures
which will enable the
auditor to verify
proper valuation of
cash.
V. Presentation and F. To determine whether 11. Investigate any
disclosure cash is presented in checks representing
accordance large or unusual
applicable Financial payments to related
Reporting Standards. parties.
12. Evaluate proper
financial statement
presentation and
disclosure of cash.
13
GRACE CORPORATION
AUDIT OF TRADE RECEIVABLES AND SALES BALANCES
I. Existence or A. To determine that 1. Obtain schedule of

occurrence receivables exists and aged trace accounts
II. Rights and represent bona fide receivable and notes
Obligations obligations owed to the receivable schedule
company as of the and reconcile to
statement of financial ledgers.
position date. 2. Confirm receivables
with debtors.
3. Inspect notes on hand
4. Perform analytical
Procedures to
determine whether
recorded sales and
receivables balances
appear reasonable.
III. Completeness B. To determine that all 5. Test cutoff sales and
transactions relative to sales returns to
receivables have been determine whether
recorded in the proper receivables are
accounting period. recorded in the proper
accounting period.
IV. Valuation or C. To determine that 6. Review collectability of
Allocation receivables are receivables and
recorded and determine the
presented at proper adequacy of allowance
amounts in for doubtful accounts.
accordance with 7. Recalculate the
PFRS. interest income from
the notes receivable.
V. Presentation and D. To determine that the 8. Evaluate financial
Disclosure receivables are statement presentation
properly presented and disclosure of
and classified in the receivables.
statement of financial 9. Obtain written client
position. representation
regarding pledge,
discount or assignment
of receivable and
about receivables form
officers, directors,
affiliates or other
related parties.
14
GRACE CORPORATION
AUDIT OF INVENTORIES
Assertions Balance-Related Common Test of Details of

Audit Objective Balances Audit Procedures
I. Existence or A. Determine whether 1. Obtain listings of

Occurrence inventories exist at inventory and
year-end and reconcile to ledgers.
represent items held 2. Observe the taking of
for sale in the ordinary physical inventory
course of business. and conduct test
counts.
3. Confirm inventories in
public warehouse and
with consignees.
II. Completeness B. 1. To determine 4. Obtain a final
whether all inventory listing from the
transactions related to client.
inventory are recorded
in the proper A. Trace test counts
accounting period. made during the inventory
2. To determine that
observation into inventory
inventory listings are
listing.
accurately compiled
and inventory B. Test the clerical
quantities include all accuracy of the final
items on hand and in inventory listing.
transit.
5. Review the year-end
cutoff of purchases
transactions.
6. Test numerical
sequence of inventory
purchase requisition.
7. Review entries to cost

of goods sold.
8. Perform the analytical

review related to inventories
and cost of goods sold.
III. Valuation or C. To determine whether 9. Make inquiries of
15
Allocation the company has legal management
title or ownership regarding inventory
rights to inventory ownership and
items and inventories examine consignment
exclude items billed to agreements
customers or owned
by others
IV. Valuation or D. To determine whether 10. Evaluate the bases
Allocation the inventories are and methods of
properly stated with inventory pricing.
respect to: 11. Vouch the test
- Cost inventory pricing.
determined by 12. Check inventory for
an acceptable quality and/or
method obsolescence.
consistently
applied.
- Slow-moving,
excess,
defective and
obsolete items
identified and
reduced to
replacement
cost or net
realizable value
if lower than
cost.
V. Presentation and E. To determine that the 13. Determine the
disclosure inventories and cost of existence of pledged
goods sold are inventory.
presented and 14. Evaluate financial
classified in the statement
financial statements in presentation of
accordance with inventories and cost
PAS/PFRS of goods sold,
including the
adequacy of
disclosure.
16
GRACE CORPORATION
AUDIT OF INVESTMENTS
I. Existence or A. To determine that 1. Obtain or prepare a

Occurrence investments in listing of securities
securities (shares, and investments
bonds, notes) owned by the
physically exist and company and related
in loans and revenue accounts and
advances exist. reconcile to the
general ledger.
2. Inspect securities on
hand.
3. Obtain confirmation
held by others.
II. Completeness B. To determine that 4. In addition to audit
investments are all procedures 2 and 3,
included in the vouch selected
statement of financial purchases and sales
position. transactions of
securities during the
year.
III. Rights and C. To determine that 5. In addition to audit
Obligations the company owns procedures 2 and 3,
or has ownership verify the client’s
rights to all cutoff of securities
investments included transactions.
in the statement of 6. Perform analytical
financial position. procedure.
7. Compute
independently
revenue from
securities.
IV. Valuation D. To determine that 8. Determine the market
investments are value if securities at
valued properly in statement of financial
accordance with the position date.
generally accepted 9. Evaluate the method
accounting of accounting for
principles. securities.
V. Presentation and E. Investments are 10. Evaluate the financial
Disclosure properly described statement
and classified in the presentation and
statement of financial related revenue or
position related loss accounts.
disclosures are
adequate.
17
GRACE CORPORATION
AUDIT OF PROPERTY, PLANT & EQUIPMENT
I. Existence or A. To determine whether 1. Obtain or prepare a

occurrence property and summary of property
equipment included in and equipment
the statement of transactions and
financial position analysis of the
physically exist. accumulated
Additions include only depreciation during
the capitalizable cost the year and reconcile
of assets purchased, to ledger.
constructed or leased 2. Conduct physical
and retirements are inspection of major
removed. acquisition of plant
and equipment.
II. Completeness B. To determine that 3. Vouch additions to
property and property and
equipment include all equipment during the
capitalizable costs year.
and are not 4. Investigate disposals
expensed. and retirements of
property and
equipment during the
year.
III. Rights and C. To determine that the 5. Examine evidence of
Obligations company has legal legal ownership of
title or equivalent property and
ownership rights to equipment.
property and 6. Examine lease
equipment included in agreement on
the statement of property and
financial position and equipment leased to
the related lease and from others.
obligation of 7. Review rental
capitalized leased revenue from land,
assets is recognized. buildings and
equipment owned by
the client but leased
to others.
IV. Valuation or D. To determine that 8. Analyze repair and
Allocation property and maintenance expense
equipment is states at accounts.
cost and allowances 9. Investigate status of
for depreciation or property computed
depletion or depletion and equipment not in
are on the basis of current use.
18
acceptable and 10. Test client’s
consistent methods. computation of
depreciation.
11. Perform analytical
procedures for
property and
equipment.
V. Presentation and E. To determine that 12. Review financial
Disclosure property and statement
equipment are presentation and
properly described disclosure for
and classified in the property and
statement of financial equipment and for
position and related related revenue and
disclosures are expensed.
adequate.
19
GRACE CORPORATION
AUDIT OF PREPAID EXPENSES
AUDIT OBJECTIVES AUDIT PROCEDURES
1. To determine that the prepaid 1. Prepaid Insurance

expenses or deferred charges a. Inspect insurance policies on a
carried forward at the beginning of test basis.
the period are actually chargeable to b. Review coverage premiums.
the operations of future periods and c. Vouch premium paid and
that definite benefits will be received amounts charged during the
in the future periods from these year and amounts prepaid at
expenses carried forward as assets. year-end.
2. To ascertain the correctness of the 2. Prepaid Advertising
prepaid or deferred amount at the a. Examine advertising contracts
end of the end of the period as well with advertising agencies and
as the amount consumed or had note effective dates covered by
expired, if any, during the period the agreement. Determine
under review. propriety of charges in the
3. To ascertain the property of the current year.
amount charged as prepaid b. Test-count undated advertising
expenses or as deferred charges. and sales promotion materials.
4. To determine the seasonableness
and consistency in amortizing
prepaid expenses and deferred
charges to expenses.
5. To determine proper presentation
and classification of prepaid
expenses and deferred charges on
the statement of financial position.
20
GRACE CORPORATION
AUDIT OF ACCOUNTS PAYABLE & NOTES PAYABLE
Assertions Balance-Related Audit Common Tests of Details

Objective Balances Procedures
I. Existence or A. To determine 1. Obtain from the

Occurrence that payables client listing of
exist as of the accounts and notes
statement of payable as of the
financial position year-end and
date. reconcile to the
general ledger.
2. Vouch recorded
liabilities to vendors’
statements.
3. Confirm recorded
liabilities directly
with the suppliers
and creditors.
Investigate
differences in
liabilities reported in
the confirmations
with the recorded
book amounts.
4. Examine bank
confirmations for
loans.
II. Completeness B. To determine 5. Perform purchases
that all cutoff examination.
transactions 6. Test for unrecorded
relating to liabilities.
payables have 7. Perform analytical
been properly procedures.
recorded.
III. Rights and C. To determine 8. In addition to audit

Obligations that payables procedures no. 3,
represent valid review
and legal claims documentation in
of third parties clients’ files.
from the client. 9. Examine
subsequent
payments to
creditors.
IV. Valuation or D. To determine 10. Vouch accounts
Allocation that payables payable schedule.
are recorded at 11. Test computation of
21
the proper accrued or prepaid
amount. interest,
V. Presentation and E. To determine 12. Scan list of payables
Disclosure that payables to determine that
are presented each major type of
and disclosed obligation is properly
according to described and
PFRS classified.
Determine that
contingent liabilities
are properly
disclosed.
13. Obtain client’s
representation letter.
22
GRACE CORPORATION
AUDIT OF STOCKHOLDERS EQUITY ACCOUNTS
ASSERTIONS AUDIT OBJECTIVES AUDIT PROCEDURES
I. Existence or A. To determine the 1. Obtain schedules of

Occurrence validity of recorded shareholder’s equity
shareholder’s equity accounts and
balances and whether reconcile to the
the transactions general ledger
actually occurred. balances.
2. Review authorizations
and terms of stock
issues.
3. Confirm stocks
outstanding with
register on stock and
transfer agent.
4. Inspect share
certificate book.
5. Inspect certificates of
shares held in
treasury.
II. Completeness B. To determine whether 6. In addition to the
recorded above mentioned
shareholder’s equity procedures, perform
accounts reflect all analytical review
data that should be procedures.
recorded.
III. Rights and C. To determine whether 7. Review articles of
Obligations the entity has the incorporation and by-
authority and execute laws.
the shareholder’s 8. Make inquiries of
equity transactions, legal counsel.
e.g., whether share
capital was legally
issued and
shareholders have
legal claim on
corporate assets at
the statement of
financial position
date.
IV. Valuation or D. To determine whether 9. Vouch share capital
Allocation the shareholder’s entries, dividend
equity balances are entries and entries to
shown in the proper retained earnings.
statement amounts in
accordance with
23
PAS/PFRS.
V. Presentation and E. To determine that the 10. Review minutes of
Disclosure shareholder’s equity board director’s and
accounts are properly shareholder’s
presented in the meetings for share
statement of financial options and dividend
position. restrictions.
11. Evaluate financial
statement
presentation and
disclosure for
shareholder’s equity
accounts.
24
25
26
GRACE CORPORATION
Summary of all Adjusting Journal Entries
AJE NO. AUDIT OF CASH
1 Cash in Bank 7,900,000
Interest Expense 17,260
Prepaid Interest Expense 2,082,740
Loans Receivable 10,000,000

To record the promissory note
discounted at 21% credited to the current account
on December 28,2018 amounted to P10,000,000.
Account No. CA 4486-9156-80
2 Cash in Bank 490,000
Miscellaneous Expense 10,000
Notes Receivable 500,000

To record the collection of notes
receivable credited to the current account on
December 29, 2018 amounted to P500,000. Account
No.CA 4486-9156-80
3 Miscellaneous Expense 2,500
Cash in Bank 2,500

To record the service charge debited to
current account on December 29,2018 amounted to
P2,500. Account No. VA 4486-9156-80
27
AUDIT OF RECEIVABLES
4 Cash in Bank 1,134,025
Accounts Receivable 1,134,025

to record collections of P1,134,025 for
December 2018:
Dec. 28,2018 - OR #118 - Louie Tan - P484,000
Dec. 30,2018 - OR# 119 - Eagle Contractors -
P165,550
Dec. 30,2018 - OR#120 - Dynasty Construction -
P186,250
Dec. 31,2018 - OR#121 - Benitez Merchandising -
P93,750
Dec. 31,2018 - OR#122 - Susan de Leon -
P204,475
5 Accounts Receivable 484,000
Sales 484,000
to adjust the amount of Accounts
Receivable.
6 Accounts Receivable 583,800
Sales 583,800
to record Sales Invoice amounted to a
total of P583,800:
Dec. 30,2018 - SI#1264 - Eagle Contractors -
P165,550
Dec. 30,2018 - SI#1265 - Dynasty Construction -
P186,250
Dec. 30,2018 - SI#1266 - Benitez Merchandising -
P232000
AUDIT OF INVENTORY
7 Merchandise Inventory 168,351.00
28
Cost of Sales 168,351.00
to adjust the amount of merchandise
inventory
8 Supplies Expense 150
Miscellaneous Expense 150

to record Petty Cash Voucher No.805 of
Bureau of Post in payment for stamps recorded in
the general ledger as Miscellaneous Expense
instead of Supplies Expense
9 Marketable Securities 500,000.00
Interest Income 500,000.00
to record the interest income found
10 Marketable Securities 279,000.00
Miscellaneous Expense 279,000.00

to record the broker's commissions (5%)
debited to Miscellaneous expense that should be
capitalized amounted to P279,000
11 Marketable Securities 1,082,500.00
Broker's fee/Miscellaneous 104,000.00
29
Gain on Sale 978,500.00
to record sales of A. Soriano Corporation
dated 11.20.2018. Cert.No. 828
12 Dividend Receivable 40,000.00
Dividend Income 40,000.00

to record 10% cash dividends to stocks
of San Miguel
AUDIT OF PROPERTY, PLANT AND EQUIPMENT
Accumulated Depreciation-Transportation
13 Equipment 600,000.00
Depreciation Expense-Building 2,283,403.00
Depreciation Expense-Furniture and Fixture 750,167.00
Depreciation Expense-Office Equipment 135,333.00

Depreciation Expense-Transportation
Equipment 600,000.00
Accumulated Depreciation-Building 2,283,403.00

Accumulated Depreciation-Furniture
and
Fixture 750,167.00
Accumulated Depreciation-Office
to adjust the amount of PPE
14 Retained Earnings 200,000.00
30
Organization Cost 200,000.00
to adjust the amount of organization cost
15 Light, Water and Telephone 148,500.00
Representation Expense 97,000.00
Accrued Expense 245,500.00
to record the accrued expenses:
Jan. 3,2019 - CV#320 - MERALCO - P85,000

Dec. 26,2018 - CV#322 - PCI BANKARD, INC -
P97,000
Jan. 4,2019 - CV#324 - PHILIPPINE LONG
DISTANCE COMPANY - P15,000
Jan. 4, 2019 - CV#325 - MWSS - P48,500
AUDIT OF NOTES RECEIVABLE AND NOTES PAYABLE
16 Interest Expense 1,816.00
Accrued Interest Payable 1,816.00
to record the interest expense
17 Accrued Interest Receivable 60,310.00
Interest Income 60,310.00
to record the interest income
18 Bad Debts Expense 14,810.00
Allowance for Bad Debts 14,810.00
31
to adjust allowance for bad debts
AUDIT OF PAYABLES
19 Output Tax 2,470,332.00
Input Tax 1,556,422.00
VAT Payable 913,910.00
to record the VAT Payable
20 Bonus Expense 2,703,004.00
Bonus Payable 2,703,004.00
to record the bonus
32
GRACE CORPORATION
Notes to Financial Statements
NOTE 1: Corporate Information
Grace Corporation was incorporated in the Philippines and registered with the Securities and
Exchange Commission (SEC) on May 10, 2019 under Registration No. 100700.
Its primary purpose is to engage in, operate, conduct, carry on and maintain the business of
importing, exporting, buying, selling, handling and otherwise dealing in all kinds of office, school
and printing supplies and all kinds of office machinery and equipment as well as general
commission business on the said products.
The company’s principal place of business is located at 12 Ninoy Ave, Parañaque City,
Philippines.
NOTE 2: Summary of Significant Accounting Policies
Basis of Preparation
The accompanying consolidated financial statements of the Group have been prepared on a
historical cost basis, except for the financial assets at fair value through profit or loss (FVPL).
The financial statements are presented in Philippine Peso (Php /₱)
Statement of Compliance
The consolidated financial statements of the Grace Corporation have been prepared in
compliance with the Philippine Financial Reporting Standards (PFRS).
Future Changes in Accounting Policies
The company will adopt the following new and amended standards and the Philippine
Interpretations enumerated below when these become effective. Except as otherwise indicated,
the company does not expect the adoption of these new and amended PFRS and Philippine
Interpretations to have significant impact on the financial statements.
Effective 2012
PAS 12 (Amendment) Income Taxes – Deferred Tax: Recovery of Underlying Assets
The amendment to PAS 12 is effective for annual periods beginning on or after January 1, 2012.
It provides a practical solution to the problem of assessing whether the recovery of an asset will
be through use or sale. It introduces a presumption that recovery of the carrying amount of an
asset will normally be through sale.
33
PFRS 7 (Amendment) Financial Instruments: Disclosures – Transfer of Financial Assets
The amendments to PFRS 7 are effective for annual period beginning on or after July 1, 2011.
The amendments will allow users of financial statements to improve their understanding of
transfer transactions of financial assets including understanding the possible effects of any risks
that may remain with the entity that transferred the assets. The amendments also require
additional disclosures if a disproportionate amount of transfer transactions are undertaken
around the end of a reporting period.
Effective 2015
PFRS 9 Financial Instruments: Classification and Measurement
PFRS 9, issued in 2010, reflects the first phase of the work on the replacement of PAS 39 and
applies the classification and measurement of financial assets and financial liabilities as defined
by PAS 39. The Standard is effective for annual periods beginning on or after January 1, 2013.
In subsequent phases, hedge accounting and derecognition will be addressed. The completion
of this project is expected in 2011. The adoption of the first phase of PFRS 9 will have an effect
on the classification and measurement of the Group’s financial assets. The Group will quantify
the effect in conjunction with the other phases, when issued, to present a more comprehensive
picture,
Cash and Cash Equivalents
Cash includes cash on hand and in banks. Cash equivalents are short-term, highly liquid
investments that are readily convertible to known amounts of cash with original maturities of
three months or less from dates of acquisition and which are subject to an insignificant risk of
chance in value.
Short-term Investments
Short-term investments are short-term placements with maturities of more than three months
but less than one year from the date of acquisition. These earn interest at the respective short-
term investment rates.
FINANCIAL INSTRUMENTS
Date of recognition
The Group recognizes a financial asset or financial liability in the consolidated statement of
financial position when it becomes a party to the contractual provision of the instrument.
Purchases or sales of financial assets that require delivery of assets within the time frame
established by regulation or convention in the marketplace are recognized on the settlement
date.
34
Initial recognition of financial instruments
All financial assets and financial liabilities are recognized initially at fair value. Except for
securities at FVPL, the initial measurement of financial assets includes transactions costs. The
Group classifies its financial assets in the following categories: financial assets at FVPL, loans
and receivables, held-to-maturity (HTM) investments and AFS financial assets. The Group also
classifies its financial liabilities into financial liabilities at FVPL and other financial liabilities. The
classification depends on the purpose of which the investments were acquired and whether they
are quoted in an active market.
The group determines the classification of its financial instruments at initial recognition and
where allowed and appropriate, re-evaluates such designation at every reporting date. Financial
instruments are classified as liability or equity in accordance with the substance of the
contractual arrangement. Interest, dividends, gains and losses relating to a financial instrument
or a component that is a financial liability, are reported as expense or income. Distributions to
holders of financial instruments classified as equity are charged directly to equity, bet of any
related income tax benefits.
Determination of fair value
The fair value for financial instruments traded in active markets at the reporting date is based on
their quoted market price or dealer price quotations (bid price for long positions and ask price for
short position), without any deduction for transaction costs. When current bid and ask price are
not available, the price of the most recent transaction provides evidence of the current fair value
as long as there has not been a significant change in economic circumstances since the time of
the transaction.
For all other financial instruments not listed in an active market, the fair value is determined by
using appropriate valuation methodologies. Valuation methodologies include net present value
techniques, comparison to similar instruments for which market observable price exist, option
pricing models and other relevant valuation models.
Inventories
Inventories are carried at the lower of cost and net realizable value (NRV).
Prepaid Expenses
Prepaid expenses are carried out at cost less the amortized proportion. These typically
comprise prepayments for commissions, marketing fees, advertising and promotions, taxes and
licenses, rentals and insurance.
Property and Equipment
Property and equipment, except for land, are carried at cost less accumulated
depreciation and amortization and any impairment value. Land is carried at cost less any
35
impairment in value. The initial cost of property and equipment consists of its construction cost
or purchase price and any directly attributable costs of bringing the property and equipment to
its working condition and location for its intended use.
Equity
When the shares are sold at premium, the difference between the proceeds at the par
value is credited to “Additional paid-in capital” account. Direct cost incurred related to equity
issuance are chargeable to “Additional paid-in capital” account. If additional paid-in capital is not
sufficient, the excess is charged against retained earnings. When the Group issues more than
one class of stock, a separate account is maintained for each class of stock and the number of
shares issued.
Subscriptions receivable pertains to the uncollected portion of the subscribed shares.

Retained earnings represent accumulated earnings of the Group less dividends declared.
Own equity instruments which are registered (treasury shares) are recognized at cost
and deducted from equity. No gain or loss is recognized in the consolidated statement of
income on the purchase, sale, issue or cancellation of the Group’s own equity instruments. Any
difference between the carrying amount and the consideration, if reissued, is recognized in
additional paid in capital. Voting rights related to treasury shares are nullified for the Group and
no dividends are allocated to them respectively. When the shares are retired, the capital stock
account is reduced by its par value and the excess of cost over par value upon retirement is
debited to additional paid-in capital to extent of the specific or average additional paid-in capital
when the shares were issued and to retained earnings for the remaining balance.
Revenue
Revenue is recognized to the extent that it is probable that the economic benefits will
flow to the company and the revenue can be reliably measured.
Gain or Loss on sale of investments
Prior to January 1, 2010, gain or loss is recognized in the consolidated statement of

income if the Group disposes some of its investment in a subsidiary or associate. Gain or loss is
computed as the difference between the proceeds of the disposal and it carrying amount of
goodwill, if any.
Expenses
Direct operating expenses and general and administrative expenses, except for lease
agreements are recognized as they are incurred.
Earnings Per Share
Basic earnings per share (EPS) is computed by dividing net income attributable to
common equity holders by the weighted average number of common shares issued and
outstanding during the year and adjusted to give retroactive effect to any stock dividends
36
declared during the period. Diluted EPS is computed by dividing net income attributable to
common equity holders by the weighted average number of common shares issued and
outstanding during the year plus the weighted average number of common shares that would be
issued on conversion of all the dilutive potential common shares. The calculation of diluted EPS
does not assume conversion, exercise or other issue of potential common share that would
have an antidilutive effect on earnings per share.
Contingencies
Contingent liabilities are not recognized in the consolidated financial statements. These
are disclosed unless the possibility of an outflow of resources embodying economic benefit is
remote. Contingent assets are not recognized in the consolidated financial statements but
disclosed when an inflow of economic benefits is probable.
Events after the Reporting Period
Post year-end events that provide additional information about the Group’s position at
the reporting date (adjusting events) are reflected in the consolidated financial statements. Post
year-end events that are not adjusting events are disclosed in the consolidated financial
statements when material.
NOTE 3: Significant Accounting Judgments and Estimates
The preparation of the accompanying consolidated financial statements in conformity with PFRS
requires management to make estimates and assumptions that affect the amount reported in
the consolidated financial statements and accompanying notes. The estimates and assumptions
used in the accompanying consolidated financial statements are based upon management’s
evaluation of relevant facts and circumstances as of the dare of the consolidated financial
statements. Actual results differ from such estimated.
Judgment
In the process of applying the Group’s accounting policies, management has made the following
judgment, apart from those involving estimations, which have the most significant effect on the
amounts recognized in the financial statements.
Classification of Financial Assets
The company had classified its equity investments in different companies as Fair Value through
Profit or Loss in accordance with the classification criterion that was set by the PFRS 9.
Depreciation of Property and Equipment
The method that was used by the company in depreciating its property and equipment is
straight line method which is one of the allowed depreciation methods under PAS 16.
37
Estimation of Allowance for Bad Debts
In estimating the number of irrecoverable receivables, the company fined it prudent to make use
of the estimation of bad debts based on the 5% of the total outstanding receivables of the
company.
2021 2020
NOTE 4 - CASH
Cash in Bank 14,230,755.00 1,090,000.00
Petty Cash 1,700.00 10,000.00
Cash 14,232,455.00 1,100,000.00
NOTE 5 - TRADE AND OTHER

RECEIVABLES
Accounts Receivable 10,252,410.00 5,850,000.00
Accounts Receivable - Others - 6,400,000.00

-
Allowance for Bad debts 512,621.00 -
Dividend Receivable 40,000.00 -
Notes Receivable 2,470,000.00 1,500,000.00
Accrued Interest Receivable 99,163.00 -
13,750,000.0
Total 12,348,952.00 0
NOTE 6 - PREPAID EXPENSES
Prepaid Advertising 50,000.00 120,000.00
Prepaid Insurance 50,000.00 80,000.00
Unused Supplies 300,000.00 300,000.00
Prepaid Interest Expense 2,082,740.00 -
Total 2,482,740.00 500,000.00
38
NOTE 7 – PLANT, PROPERTY, AND
EQUIPMENT
Land 16,500,000.00
Building 53,000,000.00
-
Accumulated Depreciation-Building 2,933,403.00
Furniture and Fixtures 3,550,000.00

Accumulated Depreciation-Furniture and -
Fixtures 1,105,167.00
Transportation Equipment 6,000,000.00

Accumulated Depreciation- -
Transportation Equipment 600,000.00
Office Equipment 2,130,000.00

Accumulated Depreciation-Office -
Total 75,980,097.00
NOTE 8 - TRADE AND OTHER

PAYABLES
Accounts Payable 5,124,090.00 906,500.00
Notes Payable 3,506,500.00
21,000,000.0
Notes Payable - Non-trade - 0
Notes Payable - Officer 1,700,000.00
SSS Medicare Premium Payable 144,720.00 62,000.00
Withholding Taxes Payable 129,600.00 52,500.00
HDMF Premiums Payable 63,200.00 -
Accrued Interest Payable 68,381.00 -
Light, Water, Telephone Payable - 29,500.00
VAT Payable 913,910.00 400,000.00
Bonus Payable 2,703,004.00 -
39
-
Organization Cost 600,000.00 -
22,450,500.0
Total 13,753,405.00 0
NOTE 9 - RETAINED EARNINGS
Retained Earnings-Dec. 31 4,281,456.00 2,459,404.00
Net Income for the year - 2018 10,721,915.00 -
Retained Earnings-Dec. 31, 2018 15,003,371.00 2,459,404.00
NOTE 10 - Net Sales
113,220,113.0 54,539,000.0
Gross Sales 0 0
- -
Sales Discount 866,435.00 300,000.00
- -
Sales Return and Allowances 1,041,475.00 800,000.00
111,312,203.0 53,439,000.0
Total 0 0
NOTE 11 - OTHER INCOME
Gain on Sale 978,500.00 -
Dividend Income 40,000.00 -
Interest Income 809,163.00 110,000.00
Purchase Discount 4,520.00 -
Total 1,832,183.00 110,000.00
NOTE 12 - GENERAL AND ADMINISTRATIVE

EXPENSE
Salaries Expense 24,022,840.00 7,000,000.00
Supplies Expense 1,412,012.00 108,000.00
Taxes and Licenses 910,000.00 900,000.00
SSS Premium Expense 1,270,500.00 270,500.00

HDMF Premium Expense
40
1,100,000.00 100,000.00
Light, Water and Telephone 1,371,500.00 210,000.00
Depreciation Expense-Building 2,933,403.00 1,650,000.00

Depreciation Expense-Furniture and
Fixtures 1,105,167.00 640,000.00
Depreciation Expense-Office Equipment 561,333.00 421,000.00
Amortization of Organizatiion Cost 200,000.00 -
Bad Debts Expense 512,621.00 280,000.00
Insurance Expense 550,000.00 200,000.00

-
Accrued Expense 245,500.00 -
Bonus Expense 2,703,004.00 -
11,779,500.0
Total 38,406,880.00 0
NOTE 13 - DISTRIBUTION EXPENSE
Gasoline Expense 1,146,000.00 100,000.00

Depreciation Expense-Transportation
Equipment 600,000.00 600,000.00
Representation Expense 217,000.00 132,000.00
Advertising Expense 820,520.00 318,000.00
Total 2,783,520.00 1,150,000.00
NOTE 14 - OTHER EXPENSE
Miscellaneous Expense 27,288.00 70,000.00
41
AUDIT LEGEND
- Checked footings
- Traced from Trial Balance to General Ledger
- Traced General Ledger to Trial Balance
- Prove mathematical accuracy of General Ledger
- Prove mathematical accuracy of Cash Receipt Book
- Prove mathematical accuracy of Cash Disbursement Book
- Traced posting from Cash Receipt Book to General Ledger
- Traced posting from Cash Disbursement Book to General Ledger
- Vouch Official Receipt supporting Cash Receipt Book
- Vouch Cash Receipt Book supporting Bank Statements
- Vouch cash vouchers supporting Cash Disbursement Book
- Trace Bank Statements to Cash Disbursement Book
- Prove mathematical accuracy of Sales Book
- Trace postings of sales book total to the General Ledger
- Vouch Sales Book supporting Sales Invoice
-Trace Sales Invoice postings to Accounts Receivable Subsidiary Ledger
-Trace Official Receipts posting to Accounts Receivable Subsidiary Ledger
- Tracing of Purchase Invoice to Purchase Book
-Trace posting of Purchase Book to General Ledger
- Prove mathematical accuracy of AR subsidiary ledgers
- Prove mathematical accuracy of SI
- Prove postings from purchase invoices to stock cards
- Prove postings from sales invoices to stock cards
- Compare OR and SI
- Prove the footings of the Inventory List
- Test pricing
- Trace Count Sheet to Inventory List
- Trace Inventory List to Count Sheet
- Trace Inventory List to Stock Cards
- Prove mathematical accuracy of Purchase Book
- Trace postings of purchase book totals to the GL
- Trace CV postings to AP subsidiary ledgers
- Prove mathematical accuracy of AP subsidiary ledgers
- Prove mathematical accuracy of PI
-Examine minutes of meetings for declaration of dividends
-Trace from Articles of Incorporation to the stock & transfer books the original
subscription
42
GRACE CORPORATION
AUDIT NOTES AND DISPOSITIONS
DECEMBER 31, 2021
AUDIT OF CASH
NOTES DISPOSITION
1. Audit of Petty Cash Fund
 Payments for stamps is Client to correct
recorded in general journal as
Miscellaneous Expense instead
of Office Supplies Expense.
 Petty Cash Voucher No.0802 Client to correct
of Mobishel Station has no
signatures.
 Petty Cash Voucher No.0802 Client to locate the missing Petty Cash
name in PLDT is not existing. Voucher
A. Mathematical Accuracy of Cash
Receipts Book
 100% accurate
B. Mathematical Accuracy of Cash
Disbursement book
 100% accurate
2. Postings from Cash Receipts Book to
General Ledger
 100%
Postings form Cash Disbursement
Book to General Ledger
 100% accurate
3. Vouching of Official Receipt supporting
Cash Receipts Book
 OR No.108 named to Luli
Samson should be dated
December 12, 2021 instead
December 15, 2021.
 OR No.112 named to Susan
De Leon should be dated
December 12, 20211 instead
December 18, 2021
Unrecorded Collections for December 2018:
OR No. Louie Tan Php484,000
118
OR No. Eagle Php165,550 AJE
119 Contractors Cash Php1,134,025
OR No. Dynasty Php186,250 Accounts Receivable Php1,134,025
120 Construction
OR No. Benitez Php93,750
121 Merchandisin
g
OR No. Susan De Php204,475
122 Leon
43
TOTAL Php1,134,025
4. Vouch Cash vouchers supporting

Cash Disbursements Book
 Cash Voucher No.300 Client to correct.
amounting Php300,000 in Cash
Disbursement Book is written
as Twenty-Nine Thousand
Seven Hundred.
 Cash Voucher No.308 didn’t Client to correct.
match with the payee in the
Check No. 12353
 Cash Voucher No. 319 didn’t Client to correct
match to the payee in Check
No. 12364
 Cash Voucher: Unrecorded
Expenses
CV No. 320 Meralco Php85, 000 AJE
CV No. 322 PCI Bank Php97, 000 Representation Expense Php148, 500
CV No. 324 PLDT Php15, 000 Light, water and telephone Php 97, 000
CV No. 325 MWSS Php48, 500 Accrued Expenses Php245, 500
TOTAL Php245, 500
5. Vouching, posting in the cash account

other than those Cash Receipt Book
and Cash Disbursement Book
 Cash Receipt:
No. 118 The auditor should confirm the bank
No. 119 reconciliation given by the bank to determine
No. 120 if it is a deposit in transit.
No. 121
No. 122
Are not deposited in the bank
 Petty Cash Voucher No. 0801 Error to be corrected by the client
should be properly dated
December 10, 2021 instead of
December 8, 2021.
named to PLDT has no
supporting Petty Cash
Voucher.
of Bureau of Post in Payment
for stamps should be recorded
in the General Journal as
Supplies Expense instead of
Miscellaneous Expense.
 Unrecorded Petty Cash
Voucher from December 2021
44
PCV Jon Php2, 550 AJE
No.0807 Sandoval Supplies Expense Php150
PCV No. Maricel Php250 Miscellaneous Expense Php150
0808 Pastor
TOTAL Php2, 800
6. Prepare a bank reconciliation.
 Examine the credit and debit
memo. AJE
 There is no record in the Cash Miscellaneous Expense Php2, 500
Book regarding the service Cash in Bank Php2, 500
charge made by the bank.
AJE
 There is no record in Cash in Cash in Bank Php490, 000
Bank regarding the collection of Miscellaneous Expense Php10, 000
Notes Receivable. Notes Receivable Php500, 000
AJE
 There is no record in the Cash Cash in Bank Php7, 900, 000
Book regarding the proceeds of Prepaid Interest Php2, 100, 000
the promissory note with a Loans Payable Php10, 000, 000
discount of 21%
45
AUDIT OF TRADE RECEIVABLES AND SALES BALANCES
NOTES DISPOSITIONS
1. Mathematical Accuracy of Sales Book.
 Amounts in the sales book 100% accurate
from Official Receipts were
properly recorded.
2. Postings form Sales Book to General
ledger.
 All amounts in the sales book 100% accurate
are recorded properly in the
general ledger.
3. Posting from Official Receipts to
Accounts Receivable Subsidiary
Ledger.
 Sampollo Company’s ledger is Client should make the missing ledger.
missing.
 M Paredes’s ledger is missing Client should make the missing ledger.
 Louie Tan’s ledger is missing Client should make the missing ledger.
 OR No. 112 named to Susan Client to correct the error.
De Leon is incorrectly posted
to Chad Acosta’s ledger
 OR No. 117 named to Luli Client to correct the error.
Samson is posted to the ledger
in a wrong amount Php868,
000 instead of Php85, 113
 OR No. 118 named to Louie
Tan amounting 484, 000 is not Client to record the amount.
recorded in the client
subsidiary ledger.
 OR No. 119 named to Eagle
Contractors amounting Client to record the amount
Php165, 550 is not recorded in
the client subsidiary ledger.
 OR No. 120 named to Dynasty
Construction amounting Client to record the amount
Php186,250 is not recorded in
 OR No. 121 named to Benitez
Merchandising amounting
Php93, 750 is note recorded in Client to record the amount
 OR No. 122 named to Susan
De Leon amounting Php204,
475 is not recorded in the Client to record the amount
client subsidiary ledger.
 OR No. 123 named to Luli
Samson amounting Php29,725
is not recorded in the client Client to correct the error
subsidiary ledger.
4. Posting of Sales Invoice to Accounts
46
Receivable Subsidiary Ledger
 Client No. 108 named to Cora Client to correct the error.
Tayag has wrong postings of
Sales Invoices with No.1161-
1162
 Sales Invoice No. 1251 named Client to correct the error.
to Eagle Contractors
amounting Php246,825 is
posted in Ann Reyes-
Employee subsidiary ledger.
 There is no subsidiary ledger Client to make the ledger.
for Sampollo Company
 Sales Invoice No. 1257 named Client to correct the error.
to Luli Samson is incorrectly
posted to the ledger as
Php868,500 instead of Php86,
850 only.
 Sales Invoice No.1259 & 1260 Client should exclude it to Building Blocks
named to Building Blocks Inc. Ledger.
is considered as a cash sale
but then posted to the ledger of
Building Blocks.
 Sales Invoice No. 1264, 1265 Adjusting Entry is needed
and 1266 is not yet recorded to AJE
Eagle Contractors, Dynasty Accounts Receivable Php583, 750
Corporation and Benitez Sales Php583, 750
Merchandising ledger
respectively.
 J. R Alano Trading has the OR Client to correct the error
of Sampollo Company
47
AUDIT OF INVENTORIES
NOTES DISPOSITION
1. Prove postings from purchase
invoices to stock card.
 Purchase invoice No. 1095 Client to correct the error.
form Sapphire Corporation
should be dated and recorded
om December 3, 2021, not
December 18, 2021.
 Purchase Invoice No. 140 is a Client to correct the error.
wrong invoice. The delivered
and received by the company
has a discrepancy of 6000 rolls
of cartolina and 1250 reams of
art paper.
 Purchase Invoice No. 1099 Client to correct the error.
from Sapphire Corporation has
a discrepancy of 100 boxes of
paper clips delivered.
 Purchase Invoice No. 147 from
Genius Paper Product is Client to correct the error.
recorded in the stock card at a
wrong date.
 Purchase Invoice No. 1090 is
recorded in the stock card as Client to correct the error.
PI 1099 and is understated by
100 box of thumb tucks.
2. Prove postings from Sales Invoices to

Stock Cards
 There are discrepancies Client to correct the error
between the Sales Invoices
number of products issued for
each customer. The date in the
Sales Invoices also didn’t
match to the date on the Stock
Cards. Client to correct the error
 Sales Invoice No. 1255,
named to Benitez
Merchandising appears that
100 boxes of pencil are not
recorded on the stock card.
There is also a discrepancy in
the recording of the 2,500
pieces of black and red ballpen
in the stock card. There is
understatement of 50 boxes of Client to correct
thumb tucks.
 Sales Invoice No. 1257 named
to Luli Samson has a
48
discrepancy of 900 pieces of
thin notebook between the
stated number in the invoice Client to correct
and the recording in the stock
card.
to Susan De Leon has a
discrepancy of 900 pieces of
thin notebook between the Client to correct
stated number in the invoice
and the recording in the stock
card.
 Sales Invoice No. 1259 named Client to correct
to Building Block Inc., appear
to be overstated by 10 boxes
of thumb tucks and 90 pieces
of red ballpen. Client to correct
to Cora Tayag appears to be
understated by 300 pads of the
12 column worksheet.
to Cora Tayag appears to be
understated by 600 pieces of
red ballpen and overstated by
2400 pieces of thin notebook.
 Sales Invoice No, 1263 named
to Centeno, Antonio & Client to correct
Tantoco, CPA’s appears that
500 boxes of pencil and 250
boxes of charcoal pencil is not
yet recorded in the stock card.
to Eagle Contractors is not yet
recorded. Client to correct
to Dynasty Construction is not
yet recorded. Client to correct
to Benitez Merchandising is
not yet recorded.
not yet recorded.
to Luli Samson is not yet Client to correct
recorded.
Client to correct
3. Compare Official Receipt and Sales
49
Invoices
 There is no issued Official
Receipt on: Client to correct
Sales Invoice No. 1256
 Official Receipt No 121 is not Client to correct
correct.
not correct.
 The date of the following Client to correct.
official receipt is incorrect:
Official Receipt No. 106
4. Prove the postings of the Inventory
List.
 Not Accurate Client to correct
 The total of Physical Inventory AJE
List per Audit did not reconcile Merchandise Inventory Php168, 350.50
with the total number of Cost of Sales Php168, 350.50
inventories in General Ledger.
5. Test pricing 100% accurate
6. Trace Count sheet to inventory list
 Some items in the inventory list Client to locate the missing items
appears to be unrecorded on
the Inventory count sheet
7. Trace Inventory to Stock Cards
 The following Stock card does Client to correct
not match the quantity
recorded in the Inventory List
Stock Card No. 1006
Stock Card No. 1009
Stock Card No. 1010
Stock Card No. 1014
Stock Card No. 1015
Stock Card No. 1018
Stock Card No. 1019
Stock Card No. 1020
Stock Card No. 1021
Stock Card No. 1022
Stock Card No. 1023
Stock Card No. 1025
Stock Card No. 1026
Stock Card No. 1028
50
 The following stock cards has Client to correct
an incorrect total:
Stock Card No. 1009
Stock Card No. 1010
Stock Card No. 1017
Stock Card No. 1021
Stock Card No. 1022
Stock Card No. 1026
Stock Card No. 1028
51
NOTES DISPOSITION
1. Vouch the investment
 Interest income
Time Deposit Php6, 500, 000
Add: Sales (5, 580, Php3, 500, 000
000 – 2, 080, 000)
TOTAL MEKETABLE Php10, 000,
SECURITIES 000
Less: General Ledger Php9, 500,000
Marketable Security
Balance
TOTAL Php500, 000
AJE
 The broker’s commission Marketable Securities Php500, 000
debited to Miscellaneous Interest income Php500, 000
expense must be capitalized AJE
with an amount of Php279, Marketable Securities Php279, 000
000 Miscellaneous Expense Php279, 000
 The sale to A. Soriano
Corporation is credited for
Php2, 080, 000 instead of just AJE
only Php950, 000. Marketable Securities Php1, 082, 500
Misc. Expense Php104, 000
Amount to be Php2, 080, 000 Gain on Sale Php978, 000
credited
Less: Brokers Fee (Php104, 000)
TOTAL Php1, 976, 000
Less: amount that (Php997, 500)
should be credited
TOTAL Php978, 500
2. Verify income against dividend

declarations
 There is an unrecorded AJE
dividend income from San Dividend receivable Php40, 000
Miguel dated December 15, Dividend Income Php40, 000
2021 and must be received
on January 15, 2022 with an
amount of Php40, 000.
3. Reconcile with general ledger
investment balance.
 100% accurate
52
AUDIT OF PROPERTY, PLANT & EQUIPMENT
NOTES DISPOSITION
1. Audit of Property, Plant and AJE
Equipment (as shown on Schedule of Dep, Expense (Building) Php2, 283, 402
PPE) Dep. Expense
(Furniture & Fixture) Php750, 167
Dep. Expense
(Office Equipment) Php135, 533
Accum. Dep.
(Trans. Equipment) (Php600, 000)
Accum. Dep
(Building) Php2, 283, 403
Accum. Dep
(Furniture & Fixture) Php750, 162
Accum. Dep.
(Office Equipment) Php135, 533
Dep. Expense
(Trans. Equipment) Php600, 000
53
NOTES DISPOSITION
1. Audit of Prepaid Expenses AJE
Retained Earnings Php242, 642
Organization Cost Php242, 642
AJE
Prepaid Insurance Php50, 000
Insurance Expense Php50, 000
54
AUDIT OF ACCOUNTS PAYABLE & NOTES PAYABLE
NOTES DISPOSITION
ACCOUNTS PAYABLE
1. Mathematical accuracy of Purchase

Book
 The column of Merchandise No adjusting entry needed. Discussion with
Inventory is understated of the client only
Php310, 600.
2. Trace Purchase Book postings to 100% accurate
General Ledger account
3. Trace Cash Voucher postings to
Accounts Payable Subsidiary Ledger.
 Subsidiary Ledger No. 1001 Client to correct the error
named to Arboleda Corporation
with Check Voucher No. 306
has a wrong amount posted. It
should be Php1, 554, 500 not
Php155, 450.
 Check Voucher No. 312 named
to Archer Supplies with the Client to correct the error
amount of Php5, 000 has no
subsidiary ledger.
4. Trace Purchase Invoice postings to
Accounts Payable Subsidiary Ledger
 Purchase Invoice No. 130 from Client to correct the error
Genius Paper Products is
wrongfully recorded in the
Accounts Payable Subsidiary
Ledger. It should be Php1, 250,
000 not Php1, 200, 000.
named to Genius Paper
Product has a wrong recording
for Purchase Invoice No. 140.
should eliminate the Purchase
Invoice No. 147 as it is a cash
transaction.
5. Prove the mathematical accuracy of 100% correct

Accounts Payable Subsidiary Ledger.
6. Reconcile total Accounts Payable 100% correct
Subsidiary Ledger with General Ledger
Account
7. Post subsequent payments on
Accounts Payable
Cash January Meralco Php85, 000
Voucher 3, 2018
55
No. 320
Cash January Representatio Php97, 000
Voucher 3, 2018 n Expense
No. 322
Cash January PLDT Php15, 000
Voucher 4, 2018
No. 324
Cash January MWSS Php48, 500
Voucher 4, 2018
No. 325
TOTAL Php245,
500
56
AUDIT OF NOTES RECEIVABLE AND PAYABLE
NOTES DISPOSITION
NOTES RECEIVABLE AND PAYABLE
1. Examine Promissory Notes
 Payee in the Promissory Note No adjusting entry needed. Discussion with
payable to the officer is named the client only
to Grace Corporation itself. It
should be properly named to
Alfredo Cacho, President of
the company.
2. Reconcile with the General Ledger 100% correct
Balances
3. Accrue or Differ Interest Income or
Interest Expense
 Note Receivable amounting AJE
Php470, 000 with 24% interest. Accrued Int. Receivable Php60, 310
Computation: Interest Income Php60, 310
Php470, 000 x 24% x 23/365
 Note Receivable amounting

Php2, 500, 00 with 24% AJE
interest. Interest Expense Php1, 816
Computation: Accrued Interest Payable Php1, 816
Php2, 500, 000 x 24% x
56/365
57
AUDIT OF STOCKHOLDERS EQUITY ACCOUNTS
NOTES DISPOSITION
1. Trace from articles of incorporation to 100% correct
the stock from transfer books the
original subscription.
2. Follow through postings in the General
Ledger Capital Stock and Subscribed
Capital Stock and Subscription
Receivable to the Stock and Transfer
Book
 Joselito Peron’s Subsidiary Client to correct the error
Ledger has showed an error in
the amount of the payment for
the stock for shares being
subscribed but bears no effect
on Stockholders Equity.
 Alicia M. David’s subsidiary Client to correct the error
ledger has an error in the
recording date for the 75, 000
number of shares amounting
Php9, 000, 000. The date
should be March 25 not May
25. Client to correct the error
 There is an incorrect date in
Sarah B. Tuason’s
Stockholders Ledger. The date
should be July 5 not June 5. Client to correct the error
 Mario Paredes is a new
subscriber. He subscribe 50,
000 shares amounting Php5,
250, 000 and he paid 50% of
the subscribed share for Php2,
625, 000.
3. Examine minutes of meetings for
declarations of dividends
 The total ordinary shares Client to correct the error
issued and outstanding was
Php750, 000 per audit. Cash
dividends is established at 10%
 Grace Corporation shall pay a Client to correct the error
bonus to its employees
computed at a rate of 15% of
the net income before the
corporate income tax.
Net before income tax Php18, 020, 025 AJE

Multiply by ________15%___ Bonus Expense Php2, 703, 004
TOTAL Php2, 703, 004 Accrued Bonus Php2, 703, 004
4. Trace Ordinary Share Capital,
Subscribed Share Capital,
58
Subscription Receivable and Premium
in excess of Par Value – Ordinary
Share Capital to Subscriber Ledger
Ordinary Share Capital (per

Subscriber Ledger)
NAME NO. OF AMOUNT
SHARES
Alicia M. 50, 000 Php12, 500,
David 75, 000 000
125, 000
Sarah B. 50, 000 Php15, 000,
Tuason 100, 000 000
150, 000
Alfredo P. 50, 000 Php15, 000,
Cacho 100, 000 000
150, 000
Joselito T. 50, 000 Php15, 000,
Peron 100, 000 000
150, 000
Luis G. 50, 000 Php12, 500,
Fragante 75, 000 000
125, 000
Balance per 700, 000 Php70, 000,
Subscriber shares 000
Ledger
Premiums in excess of Par Value Outstanding

Share Capital
Alicia M. David Php1, 500, 000
Sarah B. Tuason Php2, 000, 000
Mario Paredes Php250, 000
Luis G. Fragante Php 1, 500, 000
Balance per Php5, 250, 000
Subscriber Ledger
Balance per General Php5, 250, 000
Ledger
59
AUDIT OF REVENUES AND EXPENSES
NOTES DISPOSITION
1. Vouched Organization Cost
 All organization cost must be AJE
outright expense and should not Organization Cost Php800, 000
be capitalized. AMORT. Of Org. Cost Php800, 000
2. Salaries and Wages 100% correct
3. Taxes and Licenses 100% correct
4. Advertising Expense
 Advertisement-Times journal
where Phil Ad is the payee was
outright expensed instead of
considering it as prepayments.
 Brochures where Frank and The amount should be included
Digital are the payee was not in the recorded. Discussion with
recorded in the General Journal. the client
5. Insurance Expense
 Insurance expense was
understated, and Prepaid
Insurance was overstated
amounting Php10, 000
6. Analyze Sales
 A sales amounting Php530, 727 Client to correct the error
was not credited to Sales
Account
 There is an error in the Client to correct the error
computation of sales amounting
Php1, 422 resulting for it to be
overstated.
60
INTERNAL CONTROL MEMORANDUM
Board of Directors
GRACE CORPORATION
Ninoy Aquino Ave. Parañaque City
In planning and performing our audit of the financial statements of the Grace Corporation as of
and for the year ended December 31, 2018, in accordance with auditing standards, we
considered the Grace Corporation’s internal control over financial reporting, as a basis for
designing audit procedures that are appropriate in the circumstances for the purpose of
expressing our opinion on the financial statements, but not for the purpose of expressing an
opinion on the effectiveness of the Grace Corporation’s internal control . Accordingly, we do not
express an opinion on the effectiveness of the Grace Corporation’s internal control.
A deficiency in internal control exists when the design or operation of a control does not allow
management or employees, in the normal course of performing their assigned functions, to
prevent or detect and correct misstatements on a timely basis. A material weakness is a
deficiency or a combination of deficiencies in internal control, such that there is a reasonable
possibility that a material misstatement of the Grace Corporation’s financial statements will not
be prevented or detected and corrected on a timely basis.
Our consideration of internal control was for the limited purpose described in the first paragraph
and was not designed to identify all deficiencies in internal control that might be material
weakness. Given these limitations, during our audit we did not identify any deficiencies in
internal control that we consider to be material weaknesses. However, material weaknesses
may exist that have not been identified.
This communication is intended solely for the information and use of management, the Board of
Directors and others within the organizations and is not intended to be and should not be used
by anyone other than these specified parties.
Very truly yours
Mark Jhones C. Bagaas

Roces Adriano & Salas CPAs
61
GRACE CORPORATION
CASH COUNT SHEET
January 5, 2021
Bills Qty. Amount Total

₱500.00 1 ₱500.00 ₱500.00
₱200.00 1 ₱200.00 ₱200.00
₱100.00 2 ₱200.00 ₱200.00
₱50.00 3 ₱150.00 ₱150.00
₱20.00 5 ₱100.00 ₱100.00
Fractional Denomination
₱10.00 9 ₱90.00 ₱90.00
₱5.00 20 ₱100.00 ₱100.00
₱1.00 60 ₱60.00 ₱60.00
₱0.10 40 ₱4.00 ₱4.00
TOTAL BILLS AND FRACTIONAL DENOMINATION ₱1,404.00
Total amount of Fund per Book Php1, 700.00
Shortage (Php296)
Checks and PMO's for Deposit
Date OR No. Amount
December 28, 2018 118 ₱484,000.00

December 30, 2018 119 ₱165,650.00
December 30, 2018 120 ₱186,250.00
December 31, 2018 121 ₱93,750.00
December 31, 2018 122 ₱202,475.00
January 3, 2019 123 ₱29,725.00
TOTAL ₱1,163,760.00
Unused Stamps 11 pieces ₱5.50 ₱60.50
62
Unreplenished Vouchers
DATE PAYEE PARTICULARS AMOUNT

December 10, 2018 Luigi Deli Representation Php2, 000
Expense
December 10, 2018 Mobishel Gasoline Gasoline Expense Php2, 050
Station
December 18, 2018 Mr. Jose Castro Transportation Php250
Expense
December 20, 2018 Manila Water Works Water Bill Php500
& Sewerage System
December 21, 2018 Bureau of Posts Stamps Php150
December 29, 2018 Mobishel Gasoline Gasoline Expense Php2, 550
Stattion
TOTAL Php7, 500
Advances or IOU’s
DATE PAYEE PARTICULARS AMOUNT

December 29, 2018 Jon Sandoval Representation Php250
Expense
December 29, 2018 Maricel Pastor Gasoline Expense Php2, 550
TOTAL Php2, 800
TOTOAL AMOUNT OF FUND PER COUNT Php1, 175, 525.00
I hereby certify that the above fund amounting Php1, 175, 525.00 was counted in my presence
by Mark Jhones C. Bagaas on January 5, 2019 and the same was returned to me intact.
SARAH B. TUASON
Signature of Cashier
63
GRACE COMPANY
BANK RECONCILIATION STATEMENT
December 31, 2021
Bank Balance ₱14,267,272.00

Add: Deposit in Transit ₱85,113.00
Less: Outstanding Check -₱1,255,655.00
Adjusted Bank Balance ₱13,096,730.00
Book Balance ₱4,709,230.00

Add: Credit Memo ₱7,900,000.00
₱490,000.00
Less: Service Charge -₱2,500.00
Adjusted Book Balance ₱13,096,730.00
64
ACCOUNTS RECEIVABLE
Aging of receivables schedule
December 31, 2021
Customer Name 1 to 30 days 31 to 60 days Over 60days
Rex Entreprises (Sept.15) Php1,700,000
Louie Tan (Nov. 30) Php1,284,000
Eagle Contractors (Nov. 20) Php300,000
Ida Coronel (Nov. 30) Php138,285
Alberto & Associates CPA's

Php150,000
(Sept. 15)
Cora Tayag (Dec. 27) Php289,875
Dynasty Construction (N0v. 8) Php50,000
Anna Reyes- Employee (Nov.

Php300,000
20)
Gwendo Reyes (Nov. 5) - Php50,000
Benites Merchandising
Php138,250
(Dec. 31 & Jan. 3)
Light House Commercial (Mar
Php186,500
21 & April 19)
Building Blocks (Nov. 19) Php575,000
Carlo Santo (June 3) Php264,000.00
J.R. Alano (Oct. 5) Php1,600,000
Roces Adriano & Salas (Nov.

Php1,700,000
20)
R.V. Castro & Co. (Sept. 20 &
Php224,500 1,000,000
Nov. 30)
65
Centeno Antonio & Tantoco,
Php736,000
CPA (Dec. 29)
J.R. Alano Trading (Nov. 8) Php 150,000
TOTAL Php1,302,410 Php4,533,500 Php4,900,500
AGE OF ACCOUNTS RECEIVABLE AMOUNT
1 to 30 days Php1, 302, 410
31 to 60 days Php4, 533, 500
Over 60 days Php4, 900, 500
TOTAL ACCOUNTS RECEIVABLE Php10, 736, 410
Multiplied to: Bad debt rate ______5%_____
Allowance for Bad Debts Php586, 820. 50
NOTE:
 The bad debt allowance, 5%, is agreed upon between the company and the auditor.
 Gwendo Reyes’s account will be listed as ‘Advances to Customer’ on Current Liabilities.
 Beneitez Merchandising has an unrecorded sale amounting Php138,250 is calculated
from Php232, 000 written on Sales Invoice No. 1266 dated December 30 less the sale
amounting Php93, 750 written on Sales Invoice No. 1267 dated January 3.
AJE
Bad Debt Expense Php14, 810
Allowance for Bad Debts Php14, 810
66
GRACE CORPORATION
Accounts Receivable Confirmation Schedule
December 31, 2021
Balance per General Ledger

Balances per
Name of the Client Subsidiary Returned by Not
Confirmed No Reply
Ledger Post Office included
Rex Enterprises Php1, 700, 000 Php1,700,000

Louie Tan Php1, 284, 000 Php1,284,000
Eagle Contractors Php300, 000 Php300,000
Ida Coronel Php138, 285 Php138,285
Alberto &
Php150, 000 Php150,000
Associates, CPAs
Cora Tayag Php289, 875 Php289,875
Dynasty
Php50, 000 Php50,000
Construction
Anna Reyes –
Php300, 000 Php300,000
employee
Gwedo Reyes (Php50, 000) ( Php50,000)
Lighthouse
Php186, 500 Php186,500
Commercial
Building Blocks, Inc. Php575, 000 Php575,000
Carlo Santos Php264, 000 Php264,000
J.R. Alano Php1, 600, 000 Php1,600,000
Susan de Leon Php204, 475 Php204,475
Roces, Adriano &
Php1, 700, 000 Php1,700,000
Salas, CPAs
R.V. Castro & Co. Php1, 224, 500 Php1,224,500
Centeno, Antonio
Php736, 000 Php736,000
&Tantoco, CPAs
J.R. Alano Trading Php150, 000 Php150,000
Total Php10,802,635 Php9,423,975 Php500,000 Php428,160 Php450,500
Bal. in GL ₱10,318,635 87% 5% 4% 4%
67
GRACE CORPORATION
Summary Results of Positive Confirmation
Account Receivable
December 31, 2021
Percent of Confirmation Sent Php9, 423, 925

Php10, 802, 635 = 87%
Percent Returned by Post Office Php428, 160

Php10, 802, 635 = 4%
Percent of No Replies Php500,000

Php10, 802, 635 = 5%
Percent of Not Included Php450, 500

Php10, 802, 635 = 4%
NOTE: 4% did not materialize
68
GRACE CORPORATION
Schedule of Notes Receivables and Notes Payables
December 31, 2021
Notes Receivable
Date Payor Interest Amount
12/08/2021 Johan Morales 24% ₱ 470,000.00
11/05/2021 Alicia M. David 24% 2,000,000.00
Total Notes Receivable ₱ 2,470,000.00
Notes Payable
Date Payor Interest Amount
10/12/2021 Alfredo P. Cacho 0% ₱ 1,700,000.00
01/12/2021 Genius Paper Products 24% 1,906,500.00
12/05/2021 Genius Paper Products 27% 1,600,000.00
Total Notes Payable-Trade ₱ 3,506,500.00

Total Notes Payable-Non Trade ₱ 1,700,000.00
TOTAL ₱ 5,206,500.00
Notes: On December 29, 2021, the ₱ 2,500,000.00 notes receivable of Alicia M. David
was credited by ₱ 500,000.00 amount collected by the bank.
69
GRACE CORPORATION
Schedule of Interest Receivable and Income
December 31, 2021
Date Classification Amount Annual Days Accrued Interest

Interest Accrued Income
12/08/2021 P.N. Johann Morales ₱ 24% 23 ₱
470,000.00 7,706.67
11/05/2021 P.N. Alicia M. David 24% 54
2,500,000.00 90,000.00
12/29/2021 P.N Balance- Alicia M. 24% 2
David 2,000,000.00 2,666.67
06/20/2021 PCIB Time Deposit 18% 6 Months 5
6,500,000.00 85,000.00
Total Accrued Interest Receivable ₱684,873.34
Accrued Interest Income 11/30/2021 2
10,000.00
Accrued Interest Income 12/30/2021 ₱ 894,873.34
Notes: P.N - Promissory Note
Grace Corporation
Schedule of Notes Payable
December 31,2021
Days Accrued
Date Name of Payor Amount Interest P.A. interest
Accrued
expense
Genius Paper ₱
12.01.2021 Products 1,906,500 24% 30 37,608
Genius Paper 30,7
12.05.2021 Products 1,600,000 27% 26 73
TOTAL ACCRUED INTEREST ₱
PAYABLE 68,381
70
MERCHANDISE INVENTORY
Inventory Count Sheet

Date of Count: Client's Name: Stock Location:
January 4, 2019
Balance Sheet Date: GRACE CORPORATION Store
December 31, 2018
Description QUANTITY
Per
Auditor's Stock per Client's
Brand Stock Unit per Count Count Count List Difference Remarks
Bic Ballpen
₱ ₱ ₱ ₱
Red pcs. 3,450.00 3,960.00 3,450.00 510.00
8,50 8,
Blue pcs. 0.00 500.00 8,500.00 -
9,50 9,
Black pcs. 0.00 500.00 9,500.00 -
3,68 3, 250.
Charcoal Pencil box 0.00 430.00 3,680.00 00
2,36 2,
Plain Pencil box 0.00 360.00 2,360.00 -
2,80 2,
Whitey Bond Paper ream 0.00 800.00 2,800.00 -
3,80 3,
Yellow Pad pad 0.00 800.00 3,800.00 -
botls 66 100.
Glue Elmer's . 0.00 760.00 660.00 00
Roll-O Typewriter 63 200.
Ribbon box 0.00 830.00 630.00 00
Calculator
fx-39 pcs. - - - -
fx-40 pcs. - - - -
hl-807 pcs. - - - -
Max Stapler pcs. 5.00 5.00 -
71
Worksheet
12,550 12,
16 Columns pads .00 550.00 12,550.00 -
10,200 10,
14 Columns pads .00 200.00 10,200.00 -
14,400 14, 300.
12 Columns pads .00 700.00 14,400.00 00
12,510 12, 50.
10 Columns pads .00 100.00 12,150.00 00
Taken By: Sheet No._____of _____ Sheets
Auditor's Reporters Client's Representative ______ Complete Check

___/__ Test Check
For Auditor For Client
72
LIST OF FINDINGS TESTS OF INVENTORY
Stock Particular Sales Purchase Unit Correct Findings

No. Invoice Invoice Unit
1001 Pencil Monggol 1265 500 SI should be in 1263
Plain
1002 Pencil Staedtler 1265 500 250 SI should be in 1264 Not include
Charcoal in stock card but is in SI 1263
1003 BIC Ballpen -Red 1254 2500 SI should be in 1255
1259 240 150 Balance understand by 90 units
1262 150 750 Balance overstated by 600 units

1005 BIC Ballpen - 1254 2500 SI should be in 1255

Black
1009 Worksheet 12 1261 200 500 Balance overstated by 300 units
Columns
1010 Worksheet 10 Ending balance should be ₱
Columns 12,150
1012 Old Mill - Yellow 1266 0 1000 Balance overstated by 1000 units
Pad
1015 Cartolina 130 2250 2500 PI should be in 140 Balance
understated by 250 units
1017 Art Paper 140 750 2000 Balance overstated by 1250 units
1021 Silver Paper 1255 No paper clips included in SI
Clips Balance overstated by 100 units
1099 250 350 Balance understated by 100 units
1022 Golden Thumb 1251 No thumbtacks recorded
Tacks
1099 Should be in PI 1090

1259 30 20 Balance understated by 10 units
1028 Bind Thin 1255 4000 1000
Notebook
1257 1200 300
1258 1200 300
1262 3200 800
73
GRACE CORPORATION
Physical Inventory List
January 4, 2021
UNIT COST (Vat
ITEM BRAND inclusive) UNITS TOTAL
Plain Pencil Mongol ₱70.00 2,360.00 boxes ₱ 165,200.00
Charcoal Pencil Staedler 90.00 3,680.00 boxes 331,200.00
Red Ballpen Bic 8.50 3,450 pieces 29,325.00
Blue Ballpen Bic 8.50 8,500 pieces 72,250.00
Black Ballpen Bic 8.50 9,500 pieces 80,750.00
Fountain Pen Pilot 103.50 230 pieces 23,805.00
Worksheet
16 columns Vernal 50.00 12,550 pads 627,500.00
Intermediate Pad Old Mill 15.00 3,850 pads 57,750.00
Yellow Pad Old Mill 30.00 3,800 pads 114,000.00
Bond Paper Whitey 130.00 2,800 reams 364,000.00
Onion Skin Milky 110.00 1,960 reams 215,600.00
Cartolina 9.00 1,540 rolls 13,860.00
Plastic Cover 17.50 1,300 meters 22,750.00
Art Paper 150.00 600 reams 90,000.00
Ink Quink 57.00 350 bottles 19,950.00
Regular Folder Carona 2.50 1,900 pieces 4,750.00
Long Folder Carona 3.50 1,200 pieces 4,200.00
Paper Clips Silver 30.00 300 boxes 9,000.00
Thumbtacks Golden 40.00 350 boxes 14,000.00
Glue Elmer's 22.50 660 bottles 14,850.00
Carbon Paper Blackey 100.00 360 boxes 36,000.00
Typewriter Ribbon Roll-O 20.50 630 boxes 12,915.00
Scissors Mayon 12.00 150 pairs 1,800.00
Thick Notebook 32.50 3,450 pieces 112,125.00
Thin Notebook 27.50 10,600 pieces 291,500.00
Fastener 1.10 3,450 pieces 3,795.00
Envelope- Short Carona 2.50 0 pieces 0.00
Envelope- Long Carona 3.50 0 pieces 0.00
Calculator
fx-39 Casio 1,800.00 0 pieces 0.00
fx-40 Casio 2,000.00 0 pieces 0.00
hl-807 Casio 1,000.00 0 pieces 0.00
Stapler Max 152.50 5 pieces 762.50
Total Inventory Per Count ₱ 4,571,137.50
Total Inventory Per General 4,402,787.00
74
Ledger
Grace Corporation
Schedule of Prepayments
Description Per Book Adjustments Adjusted Balance Final Audi
December 31, 2018 Debit Credit December 31, 2018 December 31, 2017
Prepaid Advertising ₱ 50,000.00 ₱ - ₱ - ₱ 50,000.00 ₱ 120,000.00
Prepaid Insurance 50,000.00 - - 50,000.00 80,000.00
Unused Supplies 300,000.00 - - 300,000.00 300,000.00
Input Tax 1,556,422.00 36,305.00 - 1,592,727.00 600,000.00
Organization Cost 800,000.00 - 800,000.00 - 1,000,000.00
TOTAL ₱ 2,756,422.00 ₱ 36,305.00 ₱ 800,000.00 ₱ 1,992,727.00 ₱ 2,100,000.00
Schedule of Prepayments
PREPAYMENTS AND ACCRUALS
₱
168,350.50
75
GRACE CORPORATION
Schedule of Accruals
December 31, 2021
Add Adjusted
Per Books (Deduct) Balances
Withholding Tax ₱ (34,200.00) ₱ 129,600.00

Payable 129,600.00
VAT Payable 913,910.00
SSS, Medicare (87,500.00) 144,720.00

Premiums Payable 144,720.00
HDMF Premium
Payable 63,200.00 63,200.00
Accrued Interest 2,765.00

Payable 66,565.00
Total ₱ (118,935.00) ₱ 1,198,110.00

404,085.00
Output Tax
2011 ₱2,470,332.00
Less: Input
Tax 1,556,422.00
Total ₱
913,910.00
Audit Procedures
1. Inspect the reliability of the expenses and compared it with the ledger.
2. Checked unrecorded input and output tax from purchase book and sales book.
76
Grace Corporation
Schedule of Investments
Equity Investments
Name of Certificate
Date Issued Company No. No. of Share Closing Value Total
2,000. ₱
05/10/2018 PLDT 993 00 340.00 680,000.00
400.
07/31/2018 PLDT 1082 00 340.00 136,000.00
4,000.
05/10/2018 San Miguel 750 00 200.00 800,000.00
500,000.
05/10/2018 Philex Mining 820 00 1.82 910,000.00
10,000,000.0
05/10/2018 Omico 725 0 0.00190 19,000.00
₱ 2,545,000.00
Short-Term Investments
Name of
Date Issued Company Account No. Interest P.A Due Date Amount
06/30/2018 PCU Bank 775 18% 06/30/2019 ₱ 6,500,000.00
Total Investments ₱ 9,045,000.00
Grace Corporation
Schedule of Dividends on Equity Investments
Name of Date or Share

Company Declaration Classification Dividend Rate Outstanding Amount
PLDT 07/04/2018 Stock 400 Shs. 2,000 Shs. ₱ -
San Miguel 12/15/2018 Cash ₱10/Share 4,000 Shs ₱ 40,000.00
Income from
Dividends ₱ 40,000.00
77
Grace Corporation
Schedule of Property, Plant & Equipment
As of December 31, 2021
Reference/ Estimated
Ledger Description Cost DEPRECIATION BOOK
Date Life from
Classificatio Acquisition
2003 2004 VALUE
n Date
A parcel of
Land Land, Lot 4, CV-11-182 16,500,000.00 0 16,500,000.00
Block 2 -
of the
consolidated-
11-Feb
subdivision
plan
PCs 12456
situated in
Sucat,
Muntinlupa
of Paranaque,
Province of
Rizal
containing an
area of two
thousand
(2000) square
meters more
or less.
2000 sq. m.
Building concrete CV-11-182 33,000,000.00 20years 275,000.00 1,650,000.00 31,075,000.00
building
11-Feb
Additional
CV-1-5 20,000,000.00 1,000,000.00 19,000,000.00
Improvements -
01-May
SUB TOTAL
53,000,000.00 275,000.00 2,650,000.00 50,075,000.00
BUILDING
80 showcases
Furniture &
for the store CV-6-2 400,000.00 40years 5,000.00 10,000.00 385,000.00
Fixture
@ 5000
06-Jan
40 office
tablets & 40
CV-6-3 480,000.00 5years 48,000.00 96,000.00 336,000.00
office chairs
@ 24000
06-Feb
10 conference
tables with 80 CV-8-10 600,000.00 40,000.00 120,000.00 440,000.00
chairs
Aug-20
30 four-
drawer steel CV-7-10 240,000.00 22,800.00 48,000.00 265,200.00
cabinets
07-Oct
1 office safe
fire proof CV-7-11 280,000.00 26,455.00 56,000.00 197,545.00
Hobart
78
07-Nov
50 venetian
blinds CV-8-13 320,000.00 24,000.00 64,000.00 232,000.00
FineLine
Aug-15
Air-
conditioning CV-3-16 1,230,000.00 193,093.00 246,000.00 790,907.00
System
Mar-18
SUB TOTAL
FURN & FIX 3,550,000.00 359,348.00 640,000.00 2,550,652.00
PER AUDIT
Delivery 6 Isuzu
CV-12-20 6,000,000.00 10years 17,743.00 600,000.00 5,382,257.00
Vans Crewcab
Model 1993,
Motor # Dec-20
123456
Chassis #
821618
Office 10 Personal
CV-8-01 2,050,000.00 5years 170,835.00 410,000.00 1,469,165.00
Equipment Computers
Pentuim 6 08-Jan
SN 41226
SN 41231
SN 41227
SN 41232
SN 41228
SN 41233
SN 41229
SN 41234
SN 41230
SN 41235
Olympia
Electric CV-8-02 25,000.00 10years 1,042.00 2,500.00 21,458.00
Typewriter
SN 41226 08-Jan
18" Carriage,
Model 142C
Olympia
Electric CV-8-03 25,000.00 10years 1,042.00 2,500.00 21,458.00
Typewriter
SN 528376 08-Jan
12" Carriage,
Model 215
10 Electric
fans
SN 15381
CV-8-03 30,000.00 5years 2,500.00 6000 21,500.00
SN 15386
SN 15382
08-Jan
SN 15387
SN 15383
SN 15388
SN 15384
SN 15389
SN 15385
SN 15390
SUB TOTAL 2,130,000.00 175,419.00 421,000.00 1,533,581.00
OFFICE
79
EQUIPMENT
81,180,000.00 827,510.00 4,311,000.00 76,041,490.00
80
GRACE CORPORATION
Depreciation schedule
December 31, 2021
Reference Accumulated
Recorded
Years Description Cost / Depreciation Adjustments
per book
Date Should be
Building ₱33,000,000 11/02/10 ₱1,925,000
20
Improvements 20,000,000 1/5/11 1,008,403
₱53,000,000 ₱2,933,403 650,000 2,283,403
₱400,000 6/01/10 ₱126,667

480,000 6/02/10 152,000
600,000 8/20/10 160,000
Furniture &
5
Fixture 240,000 7/10/10 72,000
280,000 7/11/10 84,000
320,000 8/15/10 80,000
1,230,000 3/18/10 430,500

₱3,550,000 ₱1,105,167 355,000 750,167
10 Delivery Vans ₱6,000,000 12/20/10 ₱600,000 1,200,000 (600,000)
5 ₱2,050,000 ₱546,667
10 Office 25,000 3,333
8/01/10
10 Equipment 25,000 3,333
5 30,000 8,000
₱2,130,000 ₱561,333 426,000 135,333
Computations: page 74
GRACE CORPORATION
Schedule of Intangible Assets
December 31,2021
Date Reference
81
Securities and
Exchange CV# registration fee for
05.02.2009 Commision 2002 5-2 the corporation ₱ 100,000
Atty. Arthur CV# professional fee
04.03.2009 Cruz 2002 4-3 for incorporation
papers 200,000
Century Park CV# food served for
04.15.2009 Sheraton 2002 4-6 meetings on the
establishment of
the corporation 280,000
Officers and CV# salaries for the 1st
07.30.2009 Employees 2002 6-4 month of the
corporation's
existence 420,000
TOTAL ₱ 1,000,000
Amortization of Organization Cost (₱ 200,000)
Remaining Organization Cost ₱ 800,000
GRACE CORPORATION
Trade Payable Schedule
December 31, 2021
SUPPLIER ADDRESS AMOUNTS

Arboleda Corporation 456 Quezon Boulervard Php1, 656, 925
82
Extension, Quezon City
Sapphire Corporation 85 Quarry Avenue, Php1, 184, 670
Parañaque City
Genius Paper Products 951 Del Sol Avenue, Pasay Php1, 982, 995
City
TOTAL PER ACCOUNTS Php5, 124, 090
PAYABLE SUBSIDIARY
LEDGER
TOTAL BALANCE PER Php5, 124,000
LEDGER
GRACE CORPORATION
Summary of Accounts Payable-Trade
December 31, 2021
NAME OF SUPPLIER AMOUNT DUE

Arboleda Co. Inc Php540, 175.00
Sapphire Corporation Php1, 511, 995.00
Genius Paper Products Php2, 298, 000.00
TOTAL ACCOUNTS PAYABLE-TRADE Php4, 350, 170
83
GRACE CORPORATION
Summary of Accounts Payable Subsidiary Ledger
December 31, 2021
NAME: Arbodela Co., Inc.

ACCOUNT NO: 1001
ADDRESS: 456 Quezon Boulevard Extension, Quezon City
Date: Particulars: Debit: Credit: Balance:
November 30, 2021 Balance: ₱ 1,554,500.00
December 01, 2021 PI 101 ₱ 413,750.00 1,968,250.00
34,200.0
0
December 07, 2021 PI 107 2,002,450.00
87,500.0
0
December 09, 2021 PI 112 2,089,950.00
December 10, 2021 CV 304 ₱ 175,000.00 1,914,950.00
1,554,500.0
December 10, 2021 CV 306 0 360,450.00
85,000.0
December 16, 2021 PI 117 0 445,450.00
85,000.
December 20, 2021 CV 311 00 360,450.00
5,000.
December 21, 2021 PI 120 00 365,450.00
25,750.0
December 24, 2021 PI 127 0 391,200.00
25,750.
December 26, 2021 CV 316 00 365,450.00
19,125.0
December 29, 2021 PI 130 0 384,575.00
155,600.0
December 30, 2021 PI 825 0 ₱ 540,175.00
84
NAME: Sapphire Corporation
ACCOUNT NO: 1002
ADDRESS: 85 Quarry Avenue, Paranaque City
₱
November 30, 2021 Balance: 2,100,470.00
₱ 2,560,070.0
December 03, 2021 PI 1082 459,600.00 0
₱ 1,587,320.0
December 05, 2021 CV 301 972,750.00 0
85,000. 1,672,320.0
December 08, 2021 PI 1095 00 0
114,900. 1,557,420.0
December 10, 2021 CV 305 00 0
14,000.00 1,571,420.0
December 12, 2021 PI 1090 0
12,250. 1,583,670.0
December 23, 2021 PI 1099 00 0
13,325. 1,596,995.0
December 27, 2021 PI 1100 00 0
85,000
December 28, 2021 CV 318 .00 ₱ 1,511,995.00
85
Name: Genius Paper Products
Account No: 1003
Address: 951 Del Sol Avenue, Pasay City
₱
November 30, 2021 Balance: 1,906,500.00
Converted to
90-day 24% ₱
December 01, 2021 note 1,906,500.00
₱
December 02, 2021 PI 111 1,425,000.00 1,425,000.00
December 02, 2021 CV 300 300,000.00 1,125,000.00
December 06, 2021 PI 127 1,600,000.00 2,725,000.00

Converted to
27% 150 day
December 06, 2021 note 1,600,000.00 1,125,000.00
December 10, 2021 PI 130 1,250,000.00 2,375,000.00
December 15, 2021 PI 135 13,250.00 2,388,250.00
December 15, 2021 CV 309 625,000.00 1,763,250.00
December 20, 2021 PI 140 127,875.00 1,891,125.00
December 22, 2021 PI 145 130,000.00 2,021,125.00
45,000.00
December 26, 2021 PI 147 2,066,125.00
December 26, 2021 CV 313 32,500.00 2,033,625.00
December 26, 2021 CV 314 127,875.00 1,905,750.00
December 26, 2021 CV 315 25,000.00 1,880,750.00
December 28, 2021 PI 151 165,000.00 2,045,750.00
December 29, 2021 PI 7729 252,250.00 ₱ 2,298,000.00
86
Grace Corporation
Computation of Income Tax Liabilities
Taxable Income ₱ 10,721,914.70

Less: Tax Deductions 25%
Gross Tax Liability ₱ 8,041,436.03
Less: Tax Credits -
Total Income Tax Liability ₱ 8,041,436.03
Grace Corporation
Computation of Bonus Payable
Profit before Bonus ₱ 16,643,356.33

15% Bonus 2,170,872.56
Income Before Tax ₱ 14,472,483.76
87
Grace Corporation
Schedule of Stockholder's Contributions
2010 2011 Findings

Authorized ₱ 1,000,000.00 ₱ 1,000,000.00 N/A
Issued 450,000.00 700,000.00 Note 1
Subscribed - 50,000.00
Treasury - -
Outstanding 450,000.00 750,000.00
In Peso
Ordinary Share Capital 45,000,000.00 70,000,000.00 Note 1
Subscribed Share Capital - 5,000,000.00

Share Premium 3,500,000.00 5,250,000.00 Note 2
Subscription Receivable - (2,125,000.00) Note 3

Total Shareholder's Contribution ₱ 48,500,000.00 ₱ 78,125,000.00
NOTE:
Note 1: As to the Subscription Journal
88
GRACE CORPORATION
Schedule of Capital Stock Issued
AMOUNT
NO. OF AMOUNT SUBSCRIPTION
DATE STOCKHOLDER OF PAID
SHARES SUBSCRIBED RECEIVABLE
PREMIUM
(BALANCE)
03.25.2009 ALICIA M. DAVID 50000 5,000,000.00 5,000,000.00 -
-
1,500,000.0
75000 7,500,000.00 9,000,000.00 -
0
SARAH TUAZON 50000 5,000,000.00 5,000,000.00 -
-
2,000,000.0 12,000,000.0
100000 10,000,000.00 -
0 0
MARIO PAREDES 50000 5,000,000.00 250,000.00 2,625,000.00 2,625,000.00
ALFREDO P.
50000 5,000,000.00 5,000,000.00 -
CACHO -
10,000,000.0
100000 10,000,000.00 -
- 0
JOSELITO
50000 5,000,000.00 5,000,000.00 -
PERON -
10,000,000.0
100000 10,000,000.00 -
- 0
LUIS FRAGANTE 50000 5,000,000.00 250,000.00 5,000,000.00 -
1,500,000.0
75000 7,500,000.00 9,000,000.00 -
0
TOTAL PER 5,500,000.0 77,625,000.0
75,000,000.00 2,625,000.00
AUDIT 0 0
5,250,000.0 75,250,000.0
TOTAL PER GL 70,000,000.00 -
0 0
NOTE: NO ADJUSTMENT
89
GRACE CORPORATION
Schedule of Dividend Payable
December 31, 2021
₱
Ordinary Share Capital 70,000,000.00
Subscribed-Ordinary Share Capital
5,250,000.0
(Plus Premium in Excess of Par Value- Ordinary Share Capital) 0
Subscription Receivable-Ordinary Share Capital (2,625,000.00)
₱
Total Outstanding Share 72,625,000.00
Dividend Rate 10%
₱
Total Dividends Declared 7,262,500.00
90
Grace Corporation
Earnings per Share
₱ 10,721,914.70
Total Comprehensive Income
-
Less: Preferred Dividend
Total ₱ 10,721,914.70
Divided by: Outstanding Checks 1,225,655.00
Earnings per Share 8.7
91
GRACE CORPORATION
Schedule of Sales
SALES
MONTH GROSS SALES RETURNS & SALES DISCOUNT SALES
ALLOWANCES
JANUARY 10,062,010.00 41,000.00 35,000.00 9,986,010.00
FEBRUARY 9,025,015.00 80,020.00 60,000.00 8,884,995.00
MARCH 10,011,525.00 65,025.00 25,300.00 9,921,200.00
APRIL 15,082,845.00 122,000.00 150,000.00 14,810,845.00
MAY 13,075,070.00 101,000.00 130,000.00 12,844,070.00
JUNE 12,066,685.00 214,500.00 152,000.00 11,666,885.00
JULY 9,035,015.00 72,000.00 52,000.00 8,911,015.00
AUGUST 7,822,085.00 52,515.00 45,000.00 7,724,570.00
SEPTEMBER 9,015,025.00 66,025.00 51,000.00 8,898,000.00
OCTOBER 8,025,015.00 85,035.00 48,000.00 7,891,980.00
NOVEMBER 8,062,010.00 100,880.00 51,700.00 7,909,730.00
DECEMBER 2,811,223.00 41,475.00 66,435.00 2,703,313.00
TOTAL PER
114,093,523.00 1,041,475.00 866,435.00 112,152,613.00
AUDIT
TOTAL PER
117,060,223.00 1,041,475.00 866,435.00 112,152,313.00
SCHEDULE
TOTAL PER GL 114,060,223.00 1,041,475.00 866,435.00 112,152,313.00
Add:
Adjustments
Adj. Entry No. R 300
Adj. Entry No. F 147,812.50
Adj. Entry No. G 166,294.64
Adj. Entry No.
204,475.00
E.1
Adj. Entry No.
929,550.00
E.2
TOTAL PER GL
113,600,745.14
AS ADJUSTED
GRACE CORPORATION
92
Schedule of Purchases
December 31, 2021
Purchas
e
Invoice Input Tax
Date Purchased From No. On Account Inventory (12%)
December 1, ₱ ₱ ₱
2018 Arboleda Co., Inc. 101 413,750.00 369,420.00 44,330.00
December 2, Genius Paper

2018 Products 111 1,425,000.00 1,272,321.00 152,679.00
December 3,
2018 Sapphire Corporation 1082 459,600.00 410,357.00 49,243.00

2018 Products 127 1,600,000.00 1,428,571.00 171,429.00
December 7,
2018 Arboleda Co., Inc. 107 34,200.00 30,536.00 3,664.00
December 9,
2018 Arboleda Co., Inc. 112 87,500.00 78,125.00 9,375.00
December Genius Paper

10,2018 Products 130 1,250,000.00 1,116,071.00 133,929.00
December 12,

2018 Products 135 13,250.00 11,830.00 1,420.00
December 16,
2018 Arboleda Co., Inc. 117 85,000.00 75,893.00 9,107.00
December 18,

2018 Products 140 127,875.00 114,174.00 13,701.00
December 21,
2018 Arboleda Co., Inc. 120 5,000.00 4,464.00 536.00

2018 Products 145 130,000.00 116,071.00 13,929.00
93
December 23,
December 24,
2018 Arboleda Co., Inc. 127 25,750.00 22,991.00 2,759.00

2018 Products 147 45,000.00 40,179.00 4,821.00
December 27,

2018 Products 151 165,000.00 147,321.00 17,679.00
December 29,
2018 Arboleda Co., Inc. 130 19,125.00 17,076.00 2,049.00
Genius Paper
Products 7729 243,750.00 217,634.00 26,116.00
December 30,
2018 Arboleda Co., Inc. 825 155,600.00 138,929.00 16,671.00
₱ ₱ ₱
TOTAL 6,409,975.00 5,723,191.00 686,784.00
REPORT OF THE INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

TO ACCOMPANY PHILIPPINE INCOME TAX RETURNS (FINAL)
GRACE CORPORATION
12 Ninoy Aquino Avenue, Paranaque City, Philippines
We looked at Grace Corporation’s balance sheet as of December 31, 2021, as

well as its income statement and corresponding statement of changes in equity for just the year
completed. Our audits were conducted in line with generally accepted auditing standards and
included any accounting record tests and other auditing processes that we deemed necessary.
The financial statement linked to above, in our opinion, fairly portray Grace
Corporation’s financial situation as of December 31, 2018. And the results of its activities for the
year is in accordance with the widely accepted accounting rules that were consistently applied.
Our examinations were conducted with the goal of forming an opinion on the
financial statements in their entirety. The supplementary statement of cost of goods
manufactured and schedule of advance sales tax and manufacturer’s sales tax payments for the
year ending December 31, 2018, which is required by the Bureau of Internal Revenue is offered
94
for additional analysis and are not a required part of the basic financial statements. The
information in such supplementary statement and schedule has been subjected to the same
auditing procedures as the basic financial statements and in our judgment is honestly stated in
all relevant respects in relation to the basic financial statements as a whole.
In compliance with Revenue Regulations V-20, we are stating the following:
1. The schedule of taxes and licenses attached to the income tax returns shows the taxes
paid or accumulated by the above company for the year ending December 31, 2018.
2. No partner or management in our firm is connected to the company’s president,
manager or key stockholder through consanguinity or affinity.
By:
Roces, Adriano & Salas CPAs
CPA Certificate No. 0910078
PTR No. 0912775
Batangas City
95

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INDEPENDENT AUDITORS REPORT

To Mr. Alfredo Cacho, President, and

Report on the Financial Statements

Management Responsibility for the Financial Statements

Roces, Adriano & Salas CPAs

ASSETS 2021 2020

LIABILITIES AND EQUITY

TOTAL LIABILITIES AND ₱

Income Before Tax ₱ 16,362,720.00 ₱ 5,318,500.00

Income before Tax P 14,408,880.79

Interest Expense 114,830.00

Gain on Sale of Securities (1,026,000.00)

Interest Income (894,873.33)

Dividend Income (40,000.00)

Accrued Expenses 665,500.00

Operating Income before working capital changes P 17,601,773.79

Changes in operating assets and liabilities

Prepaid Assets (1,990,000.00)

Trade and other payables (1,259,375.88)

Income Tax Paid (1,053,816.00)

Cash Provided by operating activities P 10,825,843.67

CASH FLOWS FROM INVESTING ACTIVITIES

Property and Equipment (20,000,000.00)

Short-term Investments (12,080,000.00)

Proceeds for the sale of securities 1,976,000.00

Cash used by investing activities P (30,104,000.00)

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from borrowings 7,900,000.00

Issuance of shares 29,625,000.00

Cash provided by financing activities P 37,525,000.00

Net Increase in Cash 18,246,843.67

Cash, January 1,2011 1,100,000.00

Cash, December 31,2018 P 14,232,159.00

Audit Responsibilities and Limitations

Management Responsibilities and Representations

We appreciate the opportunity to be of assistance of the Company. If this agreement accurately

Mark Jhones Bagaas

Agreed and accepted by:

March 31, 2022

To: GRACE CORPORATION

 We’ve given you the following:

Sgd. Chief Executive Officer

Sgd. Chief Financial Officer

Assertions Audit Objectives Audit Procedures

I. Existence or A. To determine whether 1. Obtain analysis of

Assertions Audit Objectives Audit Procedures

I. Existence or A. To determine that 1. Obtain schedule of

Assertions Balance-Related Common Test of Details of

I. Existence or A. Determine whether 1. Obtain listings of

7. Review entries to cost

8. Perform the analytical

III. Valuation or C. To determine whether 9. Make inquiries of

Assertions Audit Objectives Audit Procedures

I. Existence or A. To determine that 1. Obtain or prepare a

Assertions Audit Objectives Audit Procedures

I. Existence or A. To determine whether 1. Obtain or prepare a

AUDIT OBJECTIVES AUDIT PROCEDURES

1. To determine that the prepaid 1. Prepaid Insurance