a. Your audit firm has been the statutory auditors for Apenkwa Co. Ltd. for the last three years. Thecompany prepares its financial statements to December 31 each year. Apenkwa Co. is intoproduction of consumable goods. Apenkwa has 20 wholesalers and 73 retailers for which goodsare sold to. During the year ended 31st December, 2018, all the 12,503 consumable goods producedwere sold.Selling price for one good is GHC 100 (that is GHC 1,250,300 for total sales value) but only GHO1,200,300 is shown in the cash book account.RequiredAs an auditor of your firm, state the audit work you would carry out to obtain audit evidence irreference to above case

An audit is the assessment or investigation of different books of records by an inspector followed…

Answered: a. Your audit firm has been the…

Auditing: A Risk Based-Approach (MindTap Course List)

11th Edition

ISBN:9781337619455

Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Publisher:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Chapter9: Auditing The Revenue Cycle.

Section: Chapter Questions

Problem 37RQSC

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Your audit form has been the statutory auditors for apenkwa Co. Ltd. for the last three years. The company prepares its financial statements to December 31 each year. Apenkwa Co. is into production of consumable goods. Apenkwa has 20 wholesalers and 73 retailers for which goods are to. During the year ended 31st December, 2018 all the 12,503 consumable goods produced were sold. selling price for one good is ghc 100 ( that is ghc 1,250,300 for total sales value ) but only ghc 1,200,300 is shown in the cash book account. Required: As an auditor of your firm , state the audit work you would carry out to obtain audit evidence in reference to above case
Yaso plc is a manufacture company and its financial year ended at 31st December 2019. Total assets are £40m and net profit before tax is £12m. Yaso plc’s trade receivables ledger includes a large number of customers. The year-end trade receivables balance is £4m (comparable to £2m in 2018) and the allowance for trade receivables is £400,000 (comparable to £600,000 in 2018). • Describe substantive procedures the auditor should perform to obtain sufficient and appropriate audit evidence in relation to Yaso plc’s trade receivables.
A.Yasoplc is a manufacture company and its financial year ended at 31st December 2019. Total assets are £40m and net profit before tax is £12m.Yasoplc’s trade receivables ledger includesa large number ofcustomers. The year-end trade receivables balance is £4m (comparable to £2m in 2018) and the allowance for trade receivables is £400,000 (comparable to £600,000 in 2018). •Describe substantive procedures the auditor should perform to obtainsufficientand appropriate audit evidence in relation toYasoplc’s trade receivables.
For the 2021 audit of the financial statements, you are tasked to audit EMPLEO Corporation’s liabilities. The following information relates to the obligations of EMPLEO Corporation as of December 31, 2021: Accounts payable for goods and services purchased on open account amounted to P350,000 on December 31, 2021. This amount was gross of a supplier’s debit balance of P30,000. On the other hand, the testing of the accounts receivable account revealed that a customer’s credit balance of P50,000 was netted against the balance of the accounts receivable. At December 31, 2021, EMPLEO declared a cash dividend at P0.50 per share on its P10 par value ordinary share capital, payable at January 12, 2022, to shareholders as of December 31, 2022. At December 31, 2021, EMPLEO had 1,000,0000 issued ordinary shares and 800,000 oustanding ordinary shares. The company financed its receivables, dated November 1, 2021, by discounting its 180-day P400,000 accounts receivable to a bank on a with…
For the 2021 audit of the financial statements, you are tasked to audit EMPLEO Corporation’s liabilities. The following information relates to the obligations of EMPLEO Corporation as of December 31, 2021: Accounts payable for goods and services purchased on open account amounted to P350,000 on December 31, 2021. This amount was gross of a supplier’s debit balance of P30,000. On the other hand, the testing of the accounts receivable account revealed that a customer’s credit balance of P50,000 was netted against the balance of the accounts receivable. At December 31, 2021, EMPLEO declared a cash dividend at P0.50 per share on its P10 par value ordinary share capital, payable at January 12, 2022, to shareholders as of December 31, 2022. At December 31, 2021, EMPLEO had 1,000,0000 issued ordinary shares and 800,000 oustanding ordinary shares. The company financed its receivables, dated November 1, 2021, by discounting its 180-day P400,000 accounts receivable to a bank on a with…
For the 2021 audit of the financial statements, you are tasked to audit EMPLEO Corporation's liabilities. The following information relates to the obligations of EMPLEO Corporation as of December 31, 2021: • Accounts payable for goods and services purchased on open account amounted to P350,000 on December 31, 2021. This amount was gross of a supplier's debit balance of P30,000. On the other hand, the testing of the accounts receivable account revealed that a customer's credit balance of P50,000 was netted against the balance of the accounts receivable. At December 31, 2021, EMPLEO declared a cash dividend at P0.50 per share on its P10 par value ordinary share capital, payable at January 12, 2022, to shareholders as of December 31, 2022. At December 31, 2021, EMPLEO had 1,000,0000 issued ordinary shares and 800,000 oustanding ordinary shares. • The company financed its receivables, dated November 1, 2021, by discounting its 180-day P400,000 accounts receivable to a bank on a with…
Michael Corporation is on a calendar year basis. The following data were found during your audit:1) An excerpt from the client’s trial balance revealed the following account balances:Accounts receivable P 80,000Inventory, per count 1,200,000Accounts payable 790,000Net sales 6,050,000Net purchases 3,300,000Net income 610,0002) The client conducted an inventory count on December 31, 2021. Michael Corporation normally sells at 30% gross profit based on selling price.3) Goods were in transit FOB destination from a supplier in the amount of P120,000. Further testing revealed that the suppliers invoice pertaining to the delivery was received and recorded on December 28, 2021.4) Good costing P70,000 had been received on December 31, and recorded as a purchase. However, upon your inspection, the goods were found to be defective and would be immediately returned.5) Materials costing P224,000, sold and billed on December 30 under a “bill and hold” agreement, had been segregated in the warehouse…
Michael Corporation is on a calendar year basis. The following data were found during your audit: 1) An excerpt from the client’s trial balance revealed the following account balances:Accounts receivable P 80,000Inventory, per count 1,200,000Accounts payable 790,000Net sales 6,050,000Net purchases 3,300,000Net income 610,000 2) The client conducted an inventory count on December 31, 2021. Michael Corporation normally sells at 30% gross profit based on selling price. 3) Goods were in transit FOB destination from a supplier in the amount of P120,000. Further testing revealed that the supplier's invoice pertaining to the delivery was received and recorded on December 28, 2021. 4) Good costing P70,000 had been received on December 31 and recorded as a purchase. However, upon your inspection, the goods were found to be defective and would be immediately returned. 5) Materials costing P224,000, sold and billed on December 30 under a “bill and hold” agreement, had been segregated in the…
The auditors of Final Victory Ltd (FVL) have conducted an annual audit of the company after 31 December 2020, the accounting year end of the company. Up to 31 January 2021 (before the authorization date of the financial statements), two errors are discovered: i) inventories to the value of $9,750 that had been recognized as sold during 2019 was incorrectly included in inventories as at 31 December 2019. ii) money receipt from a customer with a value of $5,250 on 31 December 2019 for service to be delivered on 2 January 2020 was recognized as a revenue in 2019. The following financial statements of FVL for 2019 (as reported) and 2020 (draft) are available: Statements of Profit or Loss and Other Comprehensive Income for the year ended 31 December (Picture Following) The tax rate was 30% for 2019 and 2020. No dividends have been declared or paid. FVL has no items of other comprehensive income since the date of incorporation. Required: Prepare the extracts on statement of changes in…
You are the senior in charge of the audit of the accounts of the Domino Industries, Inc. You and your staff have just completed the field work relative to the December 31, 2020 audit. The adjusted trial balance and certain additional information related thereto appearing in your working papers are as follows: Cash 240,000 Marketable Securities 95,000 Investment in Affiliated Companies 350,000 Accounts Receivable (including P120,000 due after one year) 680,000 Subscription Receivable 20,000 Inventories - Finished Goods 620,000 - Goods in Process 155,000 - Raw Materials 470,000 Treasury Stock (cost of 100 shares) 11,000 Construction in Progress 220,000 Land 460,000 Buildings, Machinery and Equipment 4,350,000 Cash Surrender Value of Life Insurance 60,000 Prepaid Expenses 50,000 Pre-operating Expenses 120,000 Unamortized…
You were able to gather the following in connection with our audit of the TMC Corporation for the year ended December 31, 2021. Jan 1, 2021 Dec 31, 2021 Accounts Receivable 6,400,000 4,000,000 Unpaid Merchandise invoices ? 2,621,000 Accrued Wages 85,000 125,000 Advertising supplies inventory 35,000 75,000 Accrued advertising expense 14,250 40,000 Prepaid Insurance 25,000 0 Unexpired insurance 0 41,000 During the year: Amount collected from customers, P10,000,000 Total payments to suppliers of merchandise 13,618,000 Total payments to suppliers of merchandise of prior years 4,632,000 Salaries paid 3,050,000 Advertising paid which includes 40,000 applicable in 2022, 300,000 Insurance premium paid, P125,000 Questions: 1. Net Sales for 2021 2. Net purchases for 2021 3. Salaries expense for 2021 4. Advertising expense for 2021 5.Insurance expense for 2021
During the course of the Year 2 audit of Chester Co., the auditor discovered potential cutoff problems that may or may not require adjusting journal entries. For each of the potential cutoff problems indicated below, complete the required journal entries. To prepare each required journal entry: 1. The company shipped merchandise with a carrying amount of $75,000 FOB destination on December 23, Year 2, and recorded the sale and relief of inventory on that date. The customer received the merchandise on December 31, Year 2. The merchandise has a gross profit margin of 10%. Record the necessary Year 2 adjustments, if any. 2. The company shipped merchandise with a carrying amount of $45,000 to a consignee on December 24, Year 2, and recorded the sale and the relief of inventory on that date. The consignee had not sold the merchandise as of January 5, Year 3. The merchandise has a gross profit margin of 10%. Record the necessary Year 2 adjustments, if any. 3. At the beginning of Year 2, the…

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