You have been engaged to review the financial statements of Crane Corporation. In the course of your examination, you conclude that the bookkeeper hired during the current year is not doing a good job. You notice a number of irregularities as follows. 1.   Year-end wages payable of $3,100 were not recorded because the bookkeeper thought that “they were immaterial.” 2.   Accrued vacation pay for the year of $30,300 was not recorded because the bookkeeper “never heard that you had to do it.” 3.   Insurance for a 12-month period purchased on November 1 of this year was charged to insurance expense in the amount of $2,424 because “the amount of the check is about the same every year.” 4.   Reported sales revenue for the year is $2,301,260. This includes all sales taxes collected for the year. The sales tax rate is 6%. Because the sales tax is forwarded to the state’s Department of Revenue, the Sales Tax Expense account is debited. The bookkeeper thought that “the sales tax is a selling expense.” At the end of the current year, the balance in the Sales Tax Expense account is $115,060. Prepare the necessary correcting entries, assuming that Crane uses a calendar-year basis. The books for the current year have not been closed. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

The following two tests were carried out on the accounts payable at Gardens Nursing Home:  1: A number of suppliers were selected from the list of trade creditors at year-end and  balances traced to supplier invoices and goods received notes to ensure goods were  received prior to the year-end. For two creditors out of 15 tested the balance was only  marginally overstated.  Audit conclusion: Accepted as no material errors located.  2: Selected a number of suppliers’ invoices and checked that the pricing and discount terms  have been reviewed and authorized by the purchase manager. Three out of 20 invoices  tested had not been authorized and incorrect discounts were recorded for these invoices. A  follow-up of the three samples with deviations did not highlight a pattern or specific reason  for the errors.  Audit conclusion: Accepted as the errors in discounts claimed were immaterial.  Required: For each of the test results for Gardens Nursing Home:  (a) Identify whether this is a test…

An auditor's analytical procedures have revealed that the accounts receivable of a client have doubled since the end of the prior year. However, the allowance for doubtful accounts, as a percentage of accounts receivable remained about the same. Which of the following client explanations most likely would satisfy the auditor?   a. Credit standards were liberalized in the current year. b. Twice as many accounts receivable were written off in the prior year as compared to this year. c. A greater percentage of accounts were currently listed in the "more than 90 days overdue" category than in the prior year. d. The client opened a second retail outlet in the current year and its credit sales approximately equaled the older, established outlet.

The financial records of the Movitz Company show that R. Dennis owes $4,100 on an account receivable. An independent audit is being carried out, and the auditors send a positive confirmation to R. Dennis. What is the most likely reason as to why a positive confirmation rather than a negative confirmation was used here?a. Control risk was particularly low for accounts receivable.b. Inherent risk was particularly high for accounts receivable.c. Dennis’s account was not yet due.d. Dennis’s account was not with a related party.