Audit - audit procedures

After getting the lists and totals of inventory with market value or value-at-cost of greater than $10,000, what audit procedure would you complete next? What risk and management assertion are you addressing with your proposed audit procedure?

Transactions; Financial Statements

On July 1, 2019, Pat Glenn established Half Moon Realty. Pat completed the following transactions during the month of July:

1. Opened a business bank account with a deposit of $25,000 from personal funds.
2. Purchased office supplies on account, $2,530.
3. Paid creditor on account, $1,600.
4. Earned sales commissions, receiving cash, $25,850.
5. Paid rent on office and equipment for the month, $5,070.
6. Withdrew cash for personal use, $8,000.
7. Paid automobile expenses (including rental charge) for the month, $2,430, and miscellaneous expenses, $1,160.
8. Paid office salaries, $3,050.
9. Determined that the cost of supplies on hand was $850; therefore, the cost of supplies used was $1,680.

Required:

1. Indicate the effect of each transaction and the balances after each transaction. For those boxes in which no entry is required, leave the box blank. If required, enter negative values as negative numbers.

repare an income statement for July.

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2. An income statement reports the revenues and expenses. When revenues are larger than the expenses, the difference is net income.

Prepare a statement of owner's equity for July. If an amount is zero, enter "0".

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3. Follow Example Exercise 1-5. Recall that the statement of owner's equity considers beginning owner capital, additional investments of the owner and net income for the year and withdrawals to calculate the ending capital. The net income from the income statement is needed to complete the statement of owner's equity.

Prepare a balance sheet as of July 31.

prepare statement of cash flow: Sales revenue $454,707 Sales discount $56,240 Sales return and allowance $5,687 Beginning inventory $251,890 Purchases $511,692 Ending inventory $628,122 Operating expenses, including depreciation of $46,500 $58,910 Income tax expense $27,280 Interest expense $4,730 Loss on disposal of plant assets $7,500

On January 2, 2013, Illinois Corporation issued 200,000 new shares of its $5 par value common stock valued at $19 a share for all of North Dakota Company's outstanding common shares. The fair value and book value of North Dakota's identifiable assets and liabilities were the same. Summarized balance sheet information for both companies just before the acquisition on January 2, 2013 is as follows: Illionois North Dakota

Cash $150,000 $240,000

Inventories 320,000 800,000

Other current assets 500,000 1,000,000

Land 350,000 500,000

Property, plant & equipment 4,000,000 3,000,000

Total Assets $5,320,000 $5,540,000

Accounts payable $1,000,000 $600,000

Notes payable 1,300,000 1,320,000

Common stock, $5 par 2,000,000 1,000,000

Additional paid-in capital 1,000,000 200,000

Retained earnings 20,000 2,420,000

Total Liabilities & Equities $5,320,000 $5,540,000

Prepare a consolidated balance sheet for Illinois Corporation immediately after the business combination.

I need to do a solvency ratio analysis. The company I have chosen for this is Lyft. Can someone help me with this? How do I upload the financial statement?

C4-2 From Recording Transactions (Including Adjusting Journal Entries) to Preparing Financial Statements and Closing Journal Entries (Chapters 2, 3, and 4) [LO 2-3, LO 3-3, LO 4-1, LO 4-2, LO 4-3, LO 4-4, LO 4-5, LO 4-6]

[The following information applies to the questions displayed below.]

Brothers Harry and Herman Hausyerday began operations of their machine shop (H & H Tool, Inc.) on January 1, 2016. The annual reporting period ends December 31. The trial balance on January 1, 2018, follows (the amounts are rounded to thousands of dollars to simplify):

Transactions and events during 2018 (summarized in thousands of dollars) follow:

1. Borrowed $13 cash on March 1 using a short-term note.
2. Purchased land on March 2 for future building site; paid cash, $7.
3. Issued additional shares of common stock on April 3 for $31.
4. Purchased software on July 4, $12 cash.
5. Purchased supplies on account on October 5 for future use, $17.
6. Paid accounts payable on November 6, $14.
7. Signed a $30 service contract on November 7 to start February 1, 2019.
8. Recorded revenues of $176 on December 8, including $48 on credit and $128 collected in cash.
1. Recognized salaries and wages expense on December 9, $93 paid in cash.
10. Collected accounts receivable on December 10, $32.

Data for adjusting journal entries as of December 31:

11. Unrecorded amortization for the year on software, $8.

50. Supplies counted on December 31, 2018, $11.

1000. Depreciation for the year on the equipment, $7.
14. Interest of $2 to accrue on notes payable.
15. Salaries and wages earned but not yet paid or recorded, $11.
16. Income tax for the year was $9. It will be paid in 2019.

C4-2 Part 3

3. Prepare an unadjusted trial balance. (Enter your answers in thousands of dollars.)

This year Jack intends to file a married-joint return. Jack received $173,400 of salary and paid $8,600 of interest on loans used to pay qualified tuition costs for his dependent daughter, Deb. This year Jack has also paid moving expenses of $4,550 and $35,100 of alimony to his ex-wife, Diane, who divorced him in 2012. (Round your intermediate calculations and final answer to the nearest whole dollar amount.)

Suppose that Jack also reported income of $10,900 from a half share of profits from a partnership. Disregard any potential self-employment taxes on this income. What AGI would Jack report under these circumstances?

Part 2: Problem Solving - Consolidated Financials Assume that on 1/1/X0, a parent company acquires a 70% interest in its subsidiary for a price at $480,000 over book value. The excess is assigned as follows: Asset Fair Value Useful Life Patent $320,000 8 years Goodwill 160,000 Indefinite 70% of the goodwill is allocated to the parent. Included in the attached Excel spreadsheet are the pre-consolidation financial statements for both the parent and the subsidiary.

Department S had 600 units 65% completed in process at the beginning of the period; 8,700 units completed during the period; and 1,000 units 53% completed at the end of the period. What was the number of equivalent units of production for the period for conversion if the first-in, first-out method is used to cost inventories? Assume the completion percentage applies to both direct materials and conversion cost.

a.8,100

b.8,310

c.8,840

d.9,840

15.

Department G had 3,600 units 25% completed at the beginning of the period, 11,000 units were completed during the period; 3,000 units were 20% completed at the end of the period, and the following manufacturing costs debited to the departmental work in process account during the period:

All direct materials are placed in process at the beginning of production and the first-in, first-out method of inventory costing is used. What is the total cost of 3,600 units of beginning inventory which were completed during the period (round unit cost calculations to four decimal places)?

a.$16,163

b.$62,206

c.$19,275

d.$40,000

17.

Carmelita Inc., has the following information available:

At the beginning of the period, there were 500 units in process that were 42% complete as to conversion costs and 100% complete as to direct materials costs. During the period, 5,500 units were started and completed. Ending inventory contained 400 units that were 30% complete as to conversion costs and 100% complete as to materials costs. The company uses the FIFO process cost method.

The cost of completing a unit during the current period was

a.$45.37

b.$26.36

c.$30.24

d.$36.29

The debits to Work in Process—Assembly Department for May, together with data concerning production, are as follows:

19. All direct materials are placed in process at the beginning of the process and the first-in, first-out method is used to cost inventories. The materials cost per equivalent unit for May is

a.$3.48

b.$2.20

c.$4.23

d.$2.53

25.

Mocha Company manufactures a single product by a continuous process, involving three production departments. The records indicate that direct materials, direct labor, and applied factory overhead for Department 1 were $100,000, $125,000, and $150,000, respectively. The records further indicate that direct materials, direct labor, and applied factory overhead for Department 2 were $50,000, $60,000, and $70,000, respectively. Department 2 has transferred-in costs of $390,000 for the current period. In addition, work in process at the beginning of the period for Department 2 totaled $75,000, and work in process at the end of the period totaled $90,000. The journal entry to record the flow of costs into Department 3 during the period is

a.

Work in Process—Department 3555,000

Work in Process—Department 2555,000

b.

Work in Process—Department 3375,000

Work in Process—Department 2375,000

c.

Work in Process—Department 3490,000

Work in Process—Department 2490,000

d.

Work in Process—Department 3570,000

Work in Process—Department 2570,000

29. If a department that applies FIFO process costing starts the reporting period with 50,000 physical units that were 25% complete with respect to direct materials and 40% complete with respect to conversion, it must add 12,500 equivalent units of direct materials and 20,000 equivalent units to direct labor to complete them.

True or False

30. Carmelita Inc., has the following information available:

At the beginning of the period, there were 500 units in process that were 60% complete as to conversion costs and 100% complete as to direct materials costs. During the period, 4,500 units were started and completed. Ending inventory contained 340 units that were 30% complete as to conversion costs and 100% complete as to materials costs. The company uses the FIFO process cost method.

The equivalent units of production for direct materials and conversion costs, respectively, were

a.4,602 for direct materials and 4,802 for conversion costs

b.4,902 for direct materials and 4,802 for conversion costs

c.4,840 for direct materials and 4,802 for conversion costs

d.5,340 for direct materials and 4,902 for conversion costs

Auditors should use emphasis of a matter paragraphs to draw attention to the fact that a required disclosure has been omitted from the financial statements. True or False?

A city orders a new computer for its General Fund at an anticipated cost of $95,100. Its actual cost when received is $96,680. Payment is subsequently made.

a. Prepare all required journal entries for both fund and government-wide financial statements. (Select the appropriate fund for each situation when required. If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Come-Clean Corporation produces a variety of cleaning compounds and solutions for both industrial and household use. While most of its products are processed independently, a few are related, such as the company’s Grit 337 and its Sparkle silver polish.

Grit 337 is a coarse cleaning powder with many industrial uses. It costs $1.60 a pound to make, and it has a selling price of $7.00 a pound. A small portion of the annual production of Grit 337 is retained in the factory for further processing. It is combined with several other ingredients to form a paste that is marketed as Sparkle silver polish. The silver polish sells for $5.00 per jar.

This further processing requires one-fourth pound of Grit 337 per jar of silver polish. The additional direct costs involved in the processing of a jar of silver polish are:

Overhead costs associated with processing the silver polish are:

The production supervisor has no duties other than to oversee production of the silver polish. The mixing equipment is special-purpose equipment acquired specifically to produce the silver polish. Its resale value is negligible and it does not wear out through use.

Direct labor is a variable cost at Come-Clean Corporation.

Advertising costs for the silver polish total $2,500 per month. Variable selling costs associated with the silver polish are 5% of sales.

Due to a recent decline in the demand for silver polish, the company is wondering whether its continued production is advisable. The sales manager feels that it would be more profitable to sell all of the Grit 337 as a cleaning powder.

Required:

1. What is the incremental contribution margin per jar from further processing of Grit 337 into silver polish? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

2. What is the minimum number of jars of silver polish that must be sold each month to justify the continued processing of Grit 337 into silver polish? (Round your intermediate calculations to 2 decimal places.)

Number of jars?

1. Which of the following is not an advantage of decentralization?
   1. Lower level managers are trained for increased responsibilities
   2. Managers are motivated to improve productivity
   3. Upper-level managers are able to concentrate on important decisions
   4. All of these are advantages of decentralization

2. When comparing EOQ and JIT inventory systems, which of the following statements is false?
   1. The EOQ system assumes a variable order quantity
   2. The EOQ system focuses on acquisition and holding costs
   3. JIT argues that inventory investments should be minimized
   4. The EOQ approach takes the viewpoint that some inventory is necessary
   5. JIT argues that safety stocks are unnecessary

3. Which of the following statements regarding responsibility accounting is not correct?
   1. It is most effective in a centralized business structure where senior managers exert control over various segments of a company’s operations
   2. It calls for the preparation of responsibility reports listing the budgeted and actual revenue and/or expense items over which the manager has control
   3. It requires top management to focus on long-term planning for the entire company and delegates the authority for implementing that plan to lower levels of management
   4. It calls for the preparation of report containing detailed information regarding the performance of a responsibility center

4. A factory that makes a part has no idle capacity. The factory’s opportunity cost of making this part is equal to?
   1. The fixed manufacturing cost per unit
   2. Zero
   3. The total manufacturing cost per unit
   4. The contribution margin per unit of a product that is not made
   5. The variable manufacturing cost per unit