Connect Access Card for Principles of Auditing & Other Assurance Services
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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Chapter 16, Problem 44P
To determine

Enlist the auditing procedure that can be employed to verify the total annual sales of T Restaurants.

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Your client is a company that owns a shopping center with 30 store tenants. All leases with the store tenants provide for a fixed rent plus a percentage of sales, net of sales taxes, in excess of a fixed dollar amount computed on an annual basis. Each lease also provides that the lessor may engage CPAs to audit all records of the tenant for assurance that sales are being properly reported to the lessor. You have been requested by your client to audit the records of Traders Restaurant to determine that the sales totaling $390,000 for the year ended December 31, 20X2, have been properly reported to the lessor. The restaurant and the shopping center entered into a five-year lease on January 1, 20X1. Traders Restaurant offers only table service; no liquor is served. During mealtimes, there are four or five waiters and waitresses in attendance who prepare handwritten prenumbered restaurant checks for the customers. Payment is made at a cash register, operated by the proprietor, as the…
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You are the independent auditor ­engaged to audit Millay Corporation’s December 31, 2020, financial statements. Millay manufactures household appliances. During the course of your audit, you discovered the following contingent liabilities. 1.   Millay began production of a new dishwasher in June 2020 and, by December 31, 2020, sold 120,000 to various retailers for $500 each. Each dishwasher is under a 1-year warranty. The company ­estimates that its warranty expense per dishwasher will amount to $25. At year-end, the company had already paid out $1,000,000 in warranty expenses. Millay’s income statement shows warranty expenses of $1,000,000 for 2020. 2.   In response to your attorney’s letter, Morgan Sondgeroth, Esq., has informed you that Millay has been cited for dumping toxic waste into the Kishwaukee River. Clean-up costs and fines amount to $2,750,000. Although the case is still being contested, Sondgeroth is certain that Millay will most probably have to pay the fine and clean-up…

Chapter 16 Solutions

Connect Access Card for Principles of Auditing & Other Assurance Services

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