EBK INTERMEDIATE ACCOUNTING
3rd Edition
ISBN: 9780136946465
Author: SANNELLA
Publisher: VST
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Chapter 21, Problem 21.7E
Error Analysis and Correction. Feinstein and Company completed an internal audit of its bookkeeping system that uncovered several errors. It discovered the errors on December 31 before the books were closed.
- a. A $45,000 payment for advertising was recorded as an asset in the account deferred advertising expense.
- b. Payroll for the two weeks ending November 11 amounted to $123,500 but was never recorded. Payroll taxes withheld for this pay period were $8,500.
- c. A 3-year insurance policy for $90,000 acquired on April 1 of the current year was recorded by debiting insurance expense.
- d. Sales tax was not recorded separately during the year. The company is required to collect 2% sales tax on its sales. The company’s credit sales amounted to $2,500,000 for the current year; there were no cash sales.
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Which of the following responses to an accounts receivable confirmation at December 31 would cause an audit team the most concern?a. “This amount was paid on December 30.”b. “We received this shipment on January 2.”
c. “These goods were returned for credit on November 15.”d. “The balance does not reflect our sales discount for paying by January 5.”
For each of the following situations, indicate which internal con ucedure
Johnson Company has violated:
1. Since they are costly, background chec. are not done for the employees.
Purchases of items on credit do not need the approval of the purchasing
2.
department.
All hard copies of documents are shredded after one month and electronic records
3.
are deleted
after two months.
4. The company does not prepare operating or cash budgets.
The accountant receives the checks from customers in payment of amounts due
5.
and records the
cash receipts.
6. There are no locks in the area where inventory is stored.
The hiring, firing and pay adjustments are made by the foremen in the
7.
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Time: 8 minutes
For the following statements identify the assertion related to the risk of material
misstatement. Explain your choice.
Statement 1: "I am concerned that several of the significant accounts receivable
balances on the Balance Sheet are uncollectible"
Statement 2: "I am concerned that several of the revenue transactions that were
recorded during the year didn't actually happen"
Statement 3: "I am concerned that there is a significant unrecorded liability that
should be recorded on the Balance Sheet"
Statement 4: "I am concerned that assets that don't actually exist were recored on
the Balance Sheet!"
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Chapter 21 Solutions
EBK INTERMEDIATE ACCOUNTING
Ch. 21 - Are accounting changes permitted in financial...Ch. 21 - How do firms report accounting changes under the...Ch. 21 - Prob. 21.3QCh. 21 - How do firms account for changes in accounting...Ch. 21 - Prob. 21.5QCh. 21 - Prob. 21.6QCh. 21 - Prob. 21.7QCh. 21 - Prob. 21.8QCh. 21 - Do accounting errors that self-correct within two...Ch. 21 - Does a firm need to correct an error that...
Ch. 21 - Prob. 21.1MCCh. 21 - Prob. 21.2MCCh. 21 - Prob. 21.3MCCh. 21 - Prob. 21.4MCCh. 21 - Prob. 21.5MCCh. 21 - Prob. 21.1BECh. 21 - Prob. 21.2BECh. 21 - Prob. 21.3BECh. 21 - Prob. 21.4BECh. 21 - Change in Accounting Principle, Long-Term...Ch. 21 - Prob. 21.6BECh. 21 - Prob. 21.7BECh. 21 - Prob. 21.8BECh. 21 - Prob. 21.9BECh. 21 - Prob. 21.10BECh. 21 - Prob. 21.11BECh. 21 - Prob. 21.12BECh. 21 - Prob. 21.13BECh. 21 - Prob. 21.14BECh. 21 - Prob. 21.1ECh. 21 - Prob. 21.2ECh. 21 - Prob. 21.3ECh. 21 - Prob. 21.4ECh. 21 - Prob. 21.5ECh. 21 - Prob. 21.6ECh. 21 - Error Analysis and Correction. Feinstein and...Ch. 21 - Prob. 21.8ECh. 21 - Prob. 21.9ECh. 21 - Prob. 21.10ECh. 21 - Prob. 21.1PCh. 21 - Prob. 21.2PCh. 21 - Prob. 21.3PCh. 21 - Prob. 21.4PCh. 21 - Prob. 21.5PCh. 21 - Prob. 21.6PCh. 21 - Prob. 21.7PCh. 21 - Cases Judgment Case Judgment Case: Materiality and...Ch. 21 - Prob. 1FSCCh. 21 - Surfing the Standards: Change in Accounting...Ch. 21 - Prob. 1BCC
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