Please don't give image format and no chatgpt answer Suppose that you are the auditor of amajor retail client who has reportedthe following income before taxes (IBT)for the first two quarters of the year:1st quarter = $1,200,0002nd quarter = $1,500,000You are in the process of establishingoverall materiality for the client. Basedon prior years, the client has a 10%decline in IBT from the 2nd quarter tothe 3rd quarter. You also know IBT inthe 4th quarter historically increases by25% over the 3rd quarter.Determine the amount of overallmateriality for the audit based onthese preliminary amounts.

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Suppose that you are the auditor of major retail client who has reported the following income before taxes for the first two quarters of the year 1st quarter = $1,200,000 2nd quarter = $1,500,000

Century 21 Accounting General Journal

11th Edition

ISBN:9781337680059

Author:Gilbertson

Publisher:Gilbertson

Chapter13: Accounting For Payroll And Payroll Taxes

Section: Chapter Questions

Problem 1AFE

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Suppose that you are the auditor of a major retail client who has reported the following income before taxes (IBT) for the first two quarters of the year: 1st quarter = $1,200,000 and 2nd quarter = $1,500,000. You are in the process of establishing overall materiality for the client. Based on prior years, the client has a 10% decline in IBT from the 2nd quarter to the 3rd quarter. You also know that IBT in the 4th quarter increases by 25% over the 3rd quarter. Required: Determine the amount of overall materiality for the audit based on these preliminary amounts. (Round your answer to the nearest thousand value.) Amount of overall materiality $
Suppose that you are the auditor of a major retail client who has reported the following income before taxes (IBT) for the first two quarters of the year: 1st quarter = $1,200,000 and 2nd quarter = $1,500,000. You are in the process of establishing overall materiality for the client. Based on prior years, the client has a 10% decline in IBT from the 2nd quarter to the 3rd quarter. You also know that IBT in the 4th quarter increases by 25% over the 3rd quarter. Determine the amount of overall materiality for the audit based on these preliminary amounts.
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Ernie Upshaw is the supervising manager of Sleep Tight Bedding. At the end of the year, the company’s accounting manager provides Ernie with the following information, before any adjustment.Accounts receivable $500,000Estimated percent uncollectible 9%Allowance for uncollectible accounts $20,000 (debit)Operating income $320,000In the previous year, Sleep Tight Bedding reported operating income (after adjustment) of $275,000. Ernie knows that it’s important to report an upward trend in earnings. This is important not only for Ernie’s compensation and employment, but also for the company’s stock price. If investors see a decline in earnings, the stock price could drop significantly, and Ernie owns a large amount of the company’s stock. This has caused Ernie many sleepless nights.Required:1. Record the adjustment for uncollectible accounts using the accounting manager’s estimate of 9% of accounts receivable.2. After the adjustment is recorded in requirement 1, what is the revised amount…
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