By how much would the December 31, 2021 retained earnings be misstated if no adjustments were made for the above errors? Compute for the adjusted net income for the year 2021.
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By how much would the December 31, 2021
Compute for the adjusted net income for the year 2021.
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- Five months after issuing an unqualified audit opinionand an unqualified opinion on internal controls for the audit of the year ended December31, 2013, for a large publicly traded client, the client and the auditor become aware of amaterial misstatement in sales revenue for the year in question, which was the resultof a material weakness in internal controls. Is this a subsequent event or a subsequentdiscovery of facts? What are the auditor’s responsibilities related to the audit opinion andthe opinion on internal controls?Murray & Co., CPAs completed the audit of Classic, Inc., a non-issuer, on March 1, 2018 for a January 31, 2018 fiscal year end. The audit team encountered no significant issues and found no material misstatements. Murray & Co. has audited Classic, Inc. for several years and past audits did not reveal any significant issues or material misstatements. The audit team partner determined that a standard (unmodified) report on Classic, Inc.'s financial statements was appropriate. The auditors’ report, drafted by I.M. Nu, a staff assistant, is provided below. Independent Auditor’s Report To the Board of Directors and Shareholders Classic, Inc. Report on the Audit of the Financial Statements OpinionWe have audited the financial statements of Classic Inc., which comprise the balance sheet as of January 31, 2021 and the related statements of changes in shareholders' equity and cash flows for the year then ended, and the related notes to the financial statements. In our opinion, the…You are the audit engagement partner and you noted the following during the review of the audit files of your clients: For each situation, describe with reason(s) the form of audit report that you should issue. (i)The audit team for 1st client could not observe the inventory count that was held at the year-end since the firm’s appointment as auditors was made after the company’s year-end and no alternative procedures could be used to confirm the inventory balance. (ii)Your 2nd client is currently building a distribution centre using its own employees on its own premises. In total, the company recorded a net profit of RM 40 million. The cost of direct labour amounted to RM 4 million, based on the cost records kept. This direct labour cost was included in the distribution center's cost. However, it is discovered that the direct labour costs are not supported as the related costing record have been accidentally destroyed. The collapse of many public companies in the last few years has…
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