An auditor noted that client sales increased 10 percent for the year. At the same time, Cost of Goods Sold as a percentage of sales had decreased from 45 percent to 40 percent and year-end accounts receivable had increased by 8 percent. Based on this information, the auditor interviewed the sales manager, who stated that the increase in sales without a corresponding increase in cost of goods sold was due to a price increase enacted by the company during the year. How would the auditor test the sales manager’s representation?a. Perform additional inquiries with sales personnel.b. Obtain copies of all price lists in use during the year and vouch the prices to sales invoices.c. Send confirmations asking customers about unit prices paid for product.d. Vouch vender invoices to payments made after year-end.

Use the "percent of sales method" of preparing pro forma financial statements to determine the projection for next year's accounts receivable. Make the following assumptions: current year's sales are $55,750,000; current year's cost of goods sold is $25,350,000; sales are expected to rise by 25%, The firm's investment in accounts receivable in the current year is $12,600,000. The firm's marginal tax rate is 35%. What is the projection for next year's accounts receivable? $10,320,000 $11,345,000 O $15,750,000 $8,772,000

Palmer Co. had cost of goods sold of $7,576, ending inventory of $2,270, and average inventory of $2,167. Calculate the inventory turnover. Calculate the day’s sales in inventory. What do these ratios tell you about inventory management at Palmer Co. if the industry average is a turnover of 3.3 and the day’s sales in inventory is 130 days?

Kari Downs, an auditor with Wheeler CPAS, is performing a review of Sheridan Company's inventory account. Sheridan did not have a good year, and top management is under pressure to boost reported income. According to its records, the inventory balance at year- end was $731,000. However, the following information was not considered when determining that amount. (a1) Prepare a schedule to determine the correct inventory amount. (If an amount reduces the account balance then enter with a negative sign preceding the number, e.g. -15,000, or parenthesis e.g. (15,000). Enter O if there is no effect.) 1. 2. 3. 4. 5. 6. Ending inventory-as reported Included in the company's count were goods with a cost of $241,000 that the company is holding on consignment. The goods belong to Kroeger Corporation. The physical count did not include goods purchased by Sheridan with a cost of $38,000 that were shipped FOB destination on December 28 and did not arrive at Sheridan warehouse until January 3.…

Another way to look at the concept of inventory turnover is by measuring sales per square foot. Taking the average inventory at retail and dividing it by the number of square feet devoted to a particular product will give you average sales per square foot. When you multiply this figure by the inventory turnover rate, you get the annual sales per square foot. It is important to know the amount of sales per square foot your merchandise is producing, both on average and annually. These figures should be tracked monthly and compared with industry standards for businesses of similar size and type. You own a large multi product electronics store in a regional mall. The store has 10,600 square feet of selling space divided into five departments. (a) From the table below, calculate the average and annual sales (in $) per square foot. Then calculate the annual sales (in $) for each department and the total sales (in $) for the entire store. (Round your average and annual sales per square foot…

Sizemo Elektroniks sells semiconductors that are used in games and small toys. The company has been extremely successful in recent years, recording an increase in earnings each of the past six quarters. At the end of the current quarter, Jay Shulz, the company's staff accountant, calculated the ending inventory for the semiconductors and was surprised to find that the quantity of the Hayden X537 model had not changed during the quarter. Jay confirmed his calculation with the inventory control manager, who indicated that sales of the Hayden 537X had stopped when the Hayden 637X semiconductor was released early in the quarter. Jay researched the issue further and found that the Hayden 637X semiconductor has the same applications as the Hayden 537X, but has more computing power and a lower cost than the 537X. Jay emailed this information to Tina Vereen, the chief financial officer, and recommended that the company apply the lower-of-cost-or-market method to the Hayden 537X semiconductors…

You have been asked to test the effectiveness of Ingo Corporation's control of manually approving all purchases over $25,000. During the year, Ingo Corporation has made 1,000,000 purchases, of which 3,000 were over $25,000. Jian Zhang, CPA, your supervisor, asked you to use a tolerable deviation rate of 6 percent (although she expects the rate to be only approximately 0.75 percent) and a 5 percent risk of assessing control risk too low. Use the following to determine the planned assessed level of control risk and the assessed level of control risk. (Planned) Assessed Level of Control Risk Tolerable Deviation Rate Low 2-7% Moderate 6-12% Slightly below the maximum 11-20% Maximum Over 20% a. What is the planned assessed level of control risk? multiple choice Low Moderate Slightly below the maximum Maximum b. Determine the appropriate sample size and allowable number of deviations using Figure 9.4. Sample size? Allowable Number of Deviations- c. Use Figure 9.5 to determine the achieved…

Henderson Company uses the gross profit method to estimate ending inventory and cost of goods sold when preparing monthly financial statements required by its bank. Inventory on hand at the end of July was $119,000. The following information for the month of August was available from company records: Purchases Freight-in Sales Sales returns Purchases returns $ 212,000 4,500 343,000 8,300 3,600 In addition, the controller is aware of $12,000 of inventory that was stolen during August from one of the company's warehouses. 1. Estimated ending inventory 2. Estimated ending inventory Required: 1. Calculate the estimated inventory at the end of August, assuming a gross profit ratio of 25%. 2. Calculate the estimated inventory at the end of August, assuming a markup on cost of 25%.

In the audit of the Worldwide Wholesale Company, you did extensive ratio and trend analysis as part of preliminary audit planning. Your analytical procedures identified the following: Commission expense as a percent of sales was constant for several years but has increased significantly in the current year. Commission rates have not changed. The rate of inventory turnover has steadily decreased for three years. Inventory as a percent of current assets has steadily increased for four years. The number of days’ sales in accounts receivable has steadily increased for three years. Allowance for uncollectible accounts as a percent of accounts receivable has steadily decreased for three years. The absolute amounts of depreciation expense and depreciation expense as a percent of gross fixed assets are significantly smaller than in the preceding year. Required Evaluate the potential significance of each of the changes in ratios or trends identified in your analysis on the fair…