AUDITING+ASSURANCE 12MONTH ACCESS CARD
AUDITING+ASSURANCE 12MONTH ACCESS CARD
17th Edition
ISBN: 9780135635131
Author: ARENS
Publisher: WILEY
bartleby

Concept explainers

bartleby

Videos

Question
Book Icon
Chapter 22, Problem 25DQP

(a).

To determine

Determine the desirability of preparing an audit schedule for permanent file for the mortgage and the information which should be included in the schedule.

(b).

To determine

Determine the reason behind auditing of mortgage payable, interest payable and interest expenses should be done together.

 (c).

To determine

Determine the audit procedures that can be followed to verify the issue of mortgage, balance of mortgage and interest payable accounts.

(d).

To determine

Identify the information to be disclosed in footnotes for long term note payable to help the auditor determine satisfaction of presentation objective.

Blurred answer
Students have asked these similar questions
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…
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…
You are engaged to audit the December 31, 2020, financial statements of Justin Company, a manufacturer of household appliances. Your audit disclosed the following situations: In June 2020, the company began producing and selling a new line of dishwasher. By the end of the year, it had sold 120,000 to various dealers for P15,000 each. The product was sold under a 1-year warranty, and the company estimates the warranty costs to be P750 per dishwasher. Justin had paid out P30 million in warranty expenses as of December 31, 2020, which is also the amount shown as warranty expense in its income statement for the current year. In response to your letter audit, Justin’s lawyer informed you that the company is involved in a lawsuit for violating environmental laws regulating hazardous waste. Although the litigation is pending, Justin’s lawyer is certain that Justin will most probably have to pay cleanup cost Justin is the defendant in a patent infringement suit by Bever over Justin’s use of a…
Knowledge Booster
Background pattern image
Accounting
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Similar questions
SEE MORE QUESTIONS
Recommended textbooks for you
Text book image
Auditing: A Risk Based-Approach (MindTap Course L...
Accounting
ISBN:9781337619455
Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg
Publisher:Cengage Learning
Text book image
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:Cengage Learning
Accounting for Derivatives_1.mp4; Author: DVRamanaXIMB;https://www.youtube.com/watch?v=kZky1jIiCN0;License: Standard Youtube License
Depreciation|(Concept and Methods); Author: easyCBSE commerce lectures;https://www.youtube.com/watch?v=w4lScJke6CA;License: Standard YouTube License, CC-BY