Study the following material and independent transactions below: Transaction 1 Dr Accumulated depreciation $ 100,000 Dr Accounts receivable (a related company) $ 4,900,000 Cr Buildings $ 2,600,000 Cr Gain on disposal of buildings $ 2,400,000 Transaction 2 Dr Sales returns $ 2,000,000 Dr Inventory $ 1,000,000 Cr Accounts receivable $ 2,000,000 Cr Cost of sales $ 1,000,000 Required: For each of the transactions above: Describe the transaction represented by the double entry; Describe two (2) audit assertions contained in the transaction that would be of interest to the auditor; and Describe two (2) substantive audit procedures the auditor will need to perform in order to verify these assertions.
Study the following material and independent transactions below: Transaction 1 Dr Accumulated depreciation $ 100,000 Dr Accounts receivable (a related company) $ 4,900,000 Cr Buildings $ 2,600,000 Cr Gain on disposal of buildings $ 2,400,000 Transaction 2 Dr Sales returns $ 2,000,000 Dr Inventory $ 1,000,000 Cr Accounts receivable $ 2,000,000 Cr Cost of sales $ 1,000,000 Required: For each of the transactions above: Describe the transaction represented by the double entry; Describe two (2) audit assertions contained in the transaction that would be of interest to the auditor; and Describe two (2) substantive audit procedures the auditor will need to perform in order to verify these assertions.
Century 21 Accounting Multicolumn Journal
11th Edition
ISBN:9781337679503
Author:Gilbertson
Publisher:Gilbertson
Chapter19: Accounting For Plant Assets, Depreciation, And Intangible Assets
Section: Chapter Questions
Problem 4AP
Related questions
Question
Study the following material and independent transactions below:
Transaction 1 Dr |
$ 100,000 |
|
Dr Accounts receivable (a related company) |
$ 4,900,000 |
|
Cr Buildings |
|
$ 2,600,000 |
Cr Gain on disposal of buildings |
|
$ 2,400,000 |
Transaction 2 |
|
|
Dr Sales returns |
$ 2,000,000 |
|
Dr Inventory |
$ 1,000,000 |
|
Cr Accounts receivable |
|
$ 2,000,000 |
Cr Cost of sales |
|
$ 1,000,000 |
Required:
For each of the transactions above:
- Describe the transaction represented by the double entry;
- Describe two (2) audit assertions contained in the transaction that would be of interest to the auditor; and
- Describe two (2) substantive
audit procedures the auditor will need to perform in order to verify these assertions.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 2 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Century 21 Accounting Multicolumn Journal
Accounting
ISBN:
9781337679503
Author:
Gilbertson
Publisher:
Cengage
Financial Accounting: The Impact on Decision Make…
Accounting
ISBN:
9781305654174
Author:
Gary A. Porter, Curtis L. Norton
Publisher:
Cengage Learning
Century 21 Accounting Multicolumn Journal
Accounting
ISBN:
9781337679503
Author:
Gilbertson
Publisher:
Cengage
Financial Accounting: The Impact on Decision Make…
Accounting
ISBN:
9781305654174
Author:
Gary A. Porter, Curtis L. Norton
Publisher:
Cengage Learning
College Accounting, Chapters 1-27
Accounting
ISBN:
9781337794756
Author:
HEINTZ, James A.
Publisher:
Cengage Learning,
Financial Reporting, Financial Statement Analysis…
Finance
ISBN:
9781285190907
Author:
James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Publisher:
Cengage Learning