During its first four years of operation, Vaughn Co. reported the following net income. 2015   $82,800 2016   139,700 2017   166,600 2018   239,400 Vaughn is undergoing its first financial statement audit. The external auditors noted the following: 1. In early 2018, Vaughn Co. changed its estimate of bad debt expense from 2.5% of sales to 2.0% of sales. The company therefore adjusted its net income upward for 2015 through 2017 by the following amounts. 2015   $1,800 2016   4,300 2017   5,700 2. The auditor discovered that ending inventory was misstated as indicated below for the years ending 2015 and 2017: Year   Amount of misstatement   Direction of misstatement 2015   $20,400   Overstatement 2017   $17,700   Understatement Calculate net income to be reported in Vaughn’s comparative income statements for the years 2015 to 2018

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Audit Procedures

Audit Procedures are methods and techniques performed by the auditor to determine the quality of financial information of clients, thereby expressing an opinion on true & fair view of financial statements and entity position. They are identified and applied at the planning stage of audit after determining audit objectives, scope, approach, and risk assessment.