In 2019, NMD Inc. tapped you to audit its financial statements for the first time. You completed the audit for 2019 and prepared the audited financial statements directly from the audit working papers. You have returned to make the 2020 audit and discovered that the client's bookkeeper failed to record the adjusting entries you made in 2019 audit working papers, which entailed the adjustments for the following items: A. The December 31, 2019 inventory was understated by P300,000. B. No entry was made for accrued utilities expense of P115,000 as of year-end. c. Ordinary motor repairs of P19,200 was charged to Accumulated Depreciation during 2019. D. The entity failed to record the provision for uncollectible accounts in the amount of P36,000.

In 2019, NMD Inc. tapped you to audit its financial statements for the first time. You completed the audit for 2019 and prepared the audited financial statements directly from the audit working papers. You have returned to make the 2020 audit and discovered that the client's bookkeeper failed to record the adjusting entries you made in 2019 audit working papers, which entailed the adjustments for the following items: A. The December 31, 2019 inventory was understated by P300,000. B. No entry was made for accrued utilities expense of P115,000 as of year-end. c. Ordinary motor repairs of P19,200 was charged to Accumulated Depreciation during 2019. D. The entity failed to record the provision for uncollectible accounts in the amount of P36,000.

Auditing: A Risk Based-Approach to Conducting a Quality Audit

10th Edition

ISBN:9781305080577

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

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

Chapter14: Activities Required In Completing A Quality Audit

Section: Chapter Questions

Problem 87RSCQ

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