Introduction:
Requirement 1
To ascertain: The specific alternative audit procedures that the auditor should perform
Introduction: Audit procedures are used to determine the quality of financial information by the auditors and finally they express their opinion. The procedures are different, depending upon the nature of the business. Before the Audit procedures, the auditor has information, which includes analytical review, inquiry, observation, Inspection, recalculation.
Requirement 2
To ascertain: The specific alternative audit procedures that the auditor should perform to finish the auditing the valuation and assertions for
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Chapter 9 Solutions
Auditing: A Risk Based-Approach (MindTap Course List)
- Your examination of the bank data shows that the credits consist of P78,000 of August deposits and a credit memorandum of P2,070 for collection of a P2,000 note plus interest revenue of P70. The August debits per bank consist of checks cleared, P74,700 and a debit memorandum of P40 for printing additional company checks. You also discover the following errors involving August checks: (1) a check for P230 to a creditor on account that cleared the bank in August was journalized and posted as P320, and (2) a salary check to an employee for P255 was recorded by the bank for P155. The July 31 bank reconciliation contained only two reconciling items: deposits in transit, P1,000 and outstanding checks, P2,600. 1. How much is the deposit in transit on August 31? 2. How much is the outstanding check on August 31? 3. How much is the adjusted cash balance on August 31?arrow_forwardDuring its first year of operations, Crane Company had credit sales of $3,064,300; $655,000 remained uncollected at year-end. The credit manager estimates that $36,900 of these receivables will become uncollectible. Prepare the journal entry to record the estimated uncollectibles. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Account Titles and Explanation Debit Credit List of Accounts Prepare the current assets section of the balance sheet for Crane Company. Assume that in addition to the receivables it has cash of $94,400, inventory of $135,200, and prepaid insurance of $8,500. (List Current Assets in order of liquidity.) CRANE COMPANY Balance Sheet (Partial) 24 %24 %24arrow_forwardDuring the preparation of the bank reconciliation for Building Concepts Co., Joel Knolls, the assistant controller, discovered that Lone Peak National Bank incorrectly recorded a $3,290 check written by Building Concepts Co. as $329. Joel has decided not to notify the bank but wait for the bank to detect the error. Joel plans to record the $2,961 error as Other Income if the bank fails to detect the error within the next three months.Discuss whether Joel is behaving in a professional manner.arrow_forward
- During the preparation of the bank reconciliation for Building Concepts Co., Joel Kimmel, the assistant controller, discovered that Lone Peak National Bank incorrectly recorded a $3,290 check written by Building Concepts Co. as $329. Joel has decided not to notify the bank but wait for the bank to detect the error. Joel plans to record the $2,961 error as Other Income if the bank fails to detect the error within the next three months. Discuss whether Joel is behaving in a professional manner.arrow_forwardDuring its first year of operations, Cullumber Company had credit sales of $3,701,300; $657,200 remained uncollected at year-end. The credit manager estimates that $40,500 of these receivables will become uncollectible. Prepare the journal entry to record the estimated uncollectibles. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Account Titles and Explanation Debit Credit Prepare the current assets section of the balance sheet for Cullumber Company. Assume that in addition to the receivables it has cash of $92,900, inventory of $131,400, and prepaid insurance of $8,500. (List Current Assets in order of liquidity.) CULLUMBER COMPANYBalance Sheet (Partial) Current AssetsCurrent LiabilitiesIntangible AssetsLong-term InvestmentsLong-term LiabilitiesProperty, Plant…arrow_forwardThe bank account of Kendrick Boats has an available balance of $1,215 and a check book balance of $1,422. There are uncollected deposits totaling $740. What is the amount of the disbursement float on this account? Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.arrow_forward
- During the preparation of the bank reconciliation for The Image Co., Chris Renees, the assistant controller,discovered that Empire National Bank incorrectly recorded a $936 check written by The Image Co. as $396. Chris has decided not to notify the bank but wait for the bank to detect the error. Chris plans to record the $540 error as Other Income if the bank fails to detect the error within the next three months. Determine whether Chris is behaving in a professional manner.arrow_forwardAssume that you have audited accounts receivable as of 12/31/2020 and are confident that the ending balance should be $7,188,000. Further, you know that the audited balance as of 12/31/2019 was $8,462,000. You also verified cash deposits from customers through a review of the bank account. Based on that review you believe that cash receipts from customers ranges from an amount of $40,000,000 to $41,000,000. Which amount below would represent an overstatement of revenue for the year ending 12/31/2020, based on the facts above? 1. $38,500,000 2. $41,000,000 3. $39,762,000 4. $39,100,000arrow_forwardDuring its first year of operations, Sheridan Company had credit sales of $3,596,600; $660,700 remained uncollected at year-end. The credit manager estimates that $43,200 of these receivables will become uncollectible. Prepare the journal entry to record the estimated uncollectibles. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Account Titles and Explanation Debit Credit List of Accounts Prepare the current assets section of the balance sheet for Sheridan Company. Assume that in addition to the receivables it has cash of $92,200, inventory of $134,100, and prepaid insurance of $8,100. (List Current Assets in order of liquidity.) SHERIDAN COMPANYBalance Sheet (Partial) $ $…arrow_forward
- During the preparation of the bank reconciliation for Apache Grading Co., Sarah Ferrari, the assistant controller, discovered that Rocky Spring Bank incorrectly recorded a $610 check written by Apache Grading Co. as $160. Sarah has decided not to notify the bank but wait for the bank to detect the error. Sarah plans to record the $450 error as Other Income if the bank fails to detect the error within the next three months. Discuss whether Sarah is behaving in a professional manner.arrow_forwardAs the accountant for Clean Air Controls, you attend a meeting with the sales managers to discuss credit policies. At the meeting, you report that bad debts expense for the year is estimated to be $85,000 and account receivables at year end is $1,500,000 less a $57,000 allowance for doubtful accounts. Arthur Levitt, a sales manager, asks why bad debts expense and the allowance are not the same amount. Required 1. Write a professional email explaining this concept to Arthur. The company estimates bad debts expense as 3% of sales.arrow_forwardYou are the accountant for Black Cat Ltd. (BCL) and you have just finished the aging analysis of accounts receivable. You have estimated that $5,000 of the current $98,000 of A/R will be uncollectible. The allowance for doubtful accounts had a $400 credit balance at year-end before adjustment. What amount of bad debts would you expect to see on BCL's income statement for the year? a. $0 b. $4,600 c. $5,000 d. $5,400arrow_forward
- Auditing: A Risk Based-Approach (MindTap Course L...AccountingISBN:9781337619455Author:Karla M Johnstone, Audrey A. Gramling, Larry E. RittenbergPublisher:Cengage Learning