Auditing and Assurance Services (16th Edition)
16th Edition
ISBN: 9780134065823
Author: Alvin A. Arens, Randal J. Elder, Mark S. Beasley, Chris E. Hogan
Publisher: PEARSON
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Question
Chapter 21, Problem 27DQP
a.
To determine
State whether the merchandise must be included in the inventory of the client.
b.
To determine
Explain the reason for the decision taken in part a.
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In an annual audit at December 31, 2013, you find the followingtransactions near the closing date:1. Merchandise costing $625 was received on December 28, 2013, and the invoice wasnot recorded. You located it in the hands of the purchasing agent; it was marked“on consignment.”2. A packing case containing products costing $816 was standing in the shipping roomwhen the physical inventory was taken. It was not included in the inventory becauseit was marked “Hold for shipping instructions.” Your investigation revealed that thecustomer’s order was dated December 18, 2013, but that the case was shipped and thecustomer billed on January 10, 2014. The product was a stock item of your client.3. Merchandise received on January 6, 2014, costing $720 was entered in the acquisitionsjournal on January 7, 2014. The invoice showed shipment was made FOB supplier’swarehouse on December 31, 2013. Because it was not on hand December 31, it wasnot included in inventory.4. Merchandise costing $1,822 was…
So, owner of a trading company engaged your services as auditor. There is a discrepancy between the company’s income and the sales volume. The owner suspects that the staff is committing theft. You are to determine whether or not this is true. Your investigation revealed the following:
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Required:
Total Sales
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Assume that in an annual audit of Harlowe Inc. at December 31, 2020, you find the following transactions near the closing date.
1. A special machine, fabricated to order for a customer, was finished and specifically segregated in the back part of the shipping room on December 31, 2020. The customer was billed on that date and the machine excluded from inventory although it was shipped on January 4, 2021.
2. Merchandise costing $2,800 was received on January 3, 2021, and the related purchase invoice recorded January 5. The invoice showed the shipment was made on December 29, 2020, f.o.b. destination.
3. A packing case containing a product costing $3,400 was standing in the shipping room when the physical inventory was taken. It was not included in the inventory because it was marked “Hold for shipping instructions.” Your investigation revealed that the customer's order was dated December 18, 2020, but that the case was shipped and the customer billed on January 10, 2021. The…
Chapter 21 Solutions
Auditing and Assurance Services (16th Edition)
Ch. 21 - Prob. 1RQCh. 21 - Prob. 2RQCh. 21 - Prob. 3RQCh. 21 - Prob. 4RQCh. 21 - Prob. 5RQCh. 21 - Prob. 6RQCh. 21 - Prob. 7RQCh. 21 - Prob. 8RQCh. 21 - Prob. 9RQCh. 21 - Prob. 10RQ
Ch. 21 - Prob. 11RQCh. 21 - Each employee of the Gedding Manufacturing Co., a...Ch. 21 - Prob. 13.1MCQCh. 21 - Prob. 13.2MCQCh. 21 - Prob. 13.3MCQCh. 21 - Prob. 14.1MCQCh. 21 - Prob. 14.2MCQCh. 21 - Prob. 14.3MCQCh. 21 - Prob. 15.1MCQCh. 21 - Prob. 15.2MCQCh. 21 - Prob. 15.3MCQCh. 21 - Prob. 16DQPCh. 21 - Prob. 17DQPCh. 21 - Prob. 18DQPCh. 21 - Prob. 19DQPCh. 21 - Prob. 20DQPCh. 21 - Prob. 22DQPCh. 21 - Your client, Ridgewood Heating and Cooling,...Ch. 21 - Prob. 24DQPCh. 21 - Prob. 25DQPCh. 21 - Prob. 26DQPCh. 21 - Prob. 27DQPCh. 21 - Prob. 28DQPCh. 21 - Prob. 29DQP
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