Connect Access Card for Principles of Auditing & Other Assurance Services
21st Edition
ISBN: 9781260299366
Author: Ray Whittington, Kurt Pany
Publisher: McGraw-Hill Education
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Question
Chapter 15, Problem 27QRA
To determine
Provide audit work necessary with respect to this long-term liability during your present year-end audit.
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The only long-term liability of Range Corporation is a note payable for $1 million secured by a mortgage on the company’s plant and equipment. You have audited the company annually for the three preceding years, during which time the principal amount of the note has remained unchanged. The maturity date is 10 years from the current balance sheet date. You are informed by the president of the company that all interest payments have been made promptly in accordance with the terms of the note. Under these circumstances, what audit work, if any, is necessary with respect to this long-term liability during your present year-end audit?
As of December 31 of the current year, Petersen Corporation has prepared the following information regarding its liabilities and other obligations.
Notes payable, of which $12,000 will be repaid within the next 12 months $80,000
Interest expense that will result from existing liabilities over the next 12 months 125,000
Lawsuit pending against Petersen, in which $600,000 is claimed in damages. Legal counsel can make no reasonable estimate of the company’s ultimate liability at this time 600,000
20-year bond issue that matures in two years. The entire amount will be repaid from a bond sinking fund 900,000
Accrued interest on the 20-year bond issue as of the balance sheet date 36,000
Three-year commitment to John Hoskins as chief financial officer at a salary of $275,000 per year 825,000
Note payable due within 90 days (but that is approved to be extended for an additional 18 months) 75,000
Cash deposits from customers for goods and services to be delivered over the next nine months…
The Redford Corporation took out a 20-year mortgage on June 15,2013, for $2,600,000 and pledged its only manufacturing building and the land on whichthe building stands as collateral. Each month subsequent to the issue of the mortgage,a payment of $20,000 was paid to the mortgagor. You are in charge of the current yearaudit for Redford, which has a balance sheet date of December 31, 2013. The client hasbeen audited previously by your CPA firm, but this is the first time Redford Corporationhas had a mortgage.a. Explain why it is desirable to prepare an audit schedule for the permanent file forthe mortgage. What type of information should be included in the schedule?b. Explain why the audit of mortgage payable, interest expense, and interest payableshould all be done together.c. List the audit procedures that should ordinarily be performed to verify the issueof the mortgage, the balance in the mortgage and interest payable accounts atDecember 31, 2013, and the balance in interest expense…
Chapter 15 Solutions
Connect Access Card for Principles of Auditing & Other Assurance Services
Ch. 15 - What does the trust indenture used by a...Ch. 15 - Long-term creditors often insist upon placing...Ch. 15 - Prob. 3RQCh. 15 - Prob. 4RQCh. 15 - Prob. 5RQCh. 15 - Prob. 6RQCh. 15 - Prob. 7RQCh. 15 - Prob. 8RQCh. 15 - Prob. 9RQCh. 15 - Prob. 10RQ
Ch. 15 - Mansfield Corporation has outstanding an issue of...Ch. 15 - Prob. 12RQCh. 15 - Prob. 13RQCh. 15 - What do you consider to be the most important...Ch. 15 - What is the primary responsibility of an...Ch. 15 - In the audit of a small corporation that issues...Ch. 15 - Prob. 17RQCh. 15 - Prob. 18RQCh. 15 - Prob. 19RQCh. 15 - Corporations sometimes issue their own capital...Ch. 15 - Prob. 21RQCh. 15 - Prob. 22RQCh. 15 - Prob. 23RQCh. 15 - Prob. 24RQCh. 15 - Prob. 25RQCh. 15 - Prob. 26RQCh. 15 - Prob. 27QRACh. 15 - Prob. 28QRACh. 15 - Prob. 29QRACh. 15 - You are retained by Columbia Corporation to audit...Ch. 15 - Prob. 31QRACh. 15 - Prob. 32AOQCh. 15 - Prob. 32BOQCh. 15 - Prob. 32COQCh. 15 - Prob. 32DOQCh. 15 - Prob. 32EOQCh. 15 - When a client uses paper stock certificates, an...Ch. 15 - Prob. 32GOQCh. 15 - The auditors can best verify a clients bond...Ch. 15 - Prob. 32IOQCh. 15 - All corporate capital stock transactions should...Ch. 15 - Prob. 32KOQCh. 15 - Prob. 32LOQCh. 15 - Prob. 32MOQCh. 15 - Prob. 32NOQCh. 15 - Prob. 32OOQCh. 15 - An auditor most likely would inspect loan...Ch. 15 - Prob. 32QOQCh. 15 - Match the following definitions (or partial...Ch. 15 - Prob. 34PCh. 15 - Prob. 35PCh. 15 - Prob. 36PCh. 15 - Prob. 37P
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