Auditing

Engagement letter for Auditors

The CPA firm of Test & Check has been appointed auditors for the XYZ Corporation by the company's audit committee. The engagement is limited to making an audit of the company's financial statements. The audit fee is to be at the firm's regular per diem rates plus travel costs. To confirm the arrangements, Test & Check sends an e

Activity based costing of customers for Sandy Sun Bank

Sandy Sun Bank and Trust (SSB&T) offers only checking accounts. Customers can write checks and use a network of ATM's. SSB&T earns revenue by investing the money depsited; currently it averages 5.2 percent annualy on it's investments of those deposits. To compete with larger banks, the bank pays depositers .05% on all deposits.

Benefits and limitations of an audit

A fellow business student questions the benefits of an audit as follows: "Why should a company hire auditors? As far as I can tell auditors of public companies charge millions of dollars in audit fees, and it is not clear to me that management receives any benefit for this expenditure. It is just money down the drain. It is a

Subsequent Events and the requisite audit procedures.

Namiki, CPA is auditing the financial statements of Taylor Corporation for the year ended Dec 31, 2009. Namiki plans to complete the fieldwork and sign the auditors report about March 10, 2010. Namiki is concerned about events and transactions occurring after December 31, 2009, that may affect the 2009 financial statements. W

Essence of Skunk Fragrances: Effect on Accounts Receivable

Essence of Skunk Fragrances, Ltd. sells 5600 units of its perfume collection each year at a price per unit of $425. All sales are on credit with terms of 1/10, net 40. The discount is taken by 60 percent of the customers, by its main competitor, Sewage Spray. Essence of Skunk is considering a change in its credit policy to term

Continuous audit: Likelihood of success in the future; roadblocks to success

The CICA/AICPA's study defines a continuous audit as a "...process or methodology that enables independent auditors to provide written assurance on a subject matter using a series of auditors' reports issued simultaneously with, or a short period of time after, the occurrence of events underlying the subject matter". One

Identify an example of audit procedures and describe what it means

1)Explain the concept of materiality and describe one of the ways the concept of materiality is used in planning and performing the audit. 2)What is audit risk and what is it composed of ? 3)What is the definition of audit evidence ? 4)Identify and describe one of the six factors that influence the reliability of audit

Bank Reconciliation and Bad-Debt Reporting

Please see attached - 4 questions E8-27 Angela Lansbury Company deposits all receipts and makes all payments by check. The following information is available from the cash records. June 30 Bank Reconciliation Balance per bank 7,000 Add: Deposits in transit 1,540 Deduct: Outstanding checks (2,000) Bala

Determine back reconciliation info

Prepare a bank reconciliation as of October 31 using the attached info - see attachment for details. Refer to the information given below. a. The October 31 cash balance in the general ledger is $844. b. The October 31 balance shown on the bank statement is $373. c. Check

Accounts Receivable and Notes payable

1.The following information is available regrading the outstanding accounts receivable of Mufu Contracting at September 30, 211: Month of credit Sale Customer May June July Aug Sept B. Axley 28,000 0 0 0 0 T. Holton 0 0 72,000 24,000 14,000 W. Nix 0 18,000 0 4,000 12,000 C. Percy 0 0 4,000 0 10,000 K. Willis 0 0 0 0 9

Size of Accounts Receivable

Corporate Finance question: Tidwell, Inc. has weekly credit sales of $19,400, and the average collection period is 34 days. The cost of production is 75 percent of the selling price. What is the average accounts receivable figure? The book explains monitoring receivables and aging schedules but nothing about average accoun

Accounts receivable changes with bad debts

14.9 Accounts receivable changes with bad debts A firm is evaluating an accounts receivable change that would increase bad debts from 2% to 4% of sales. Sales are currently 50,000 units, the selling price is $20 per unit, and the variable cost per unit is $15. As a result of the proposed change, sales are forecast to increase t

Investment in receivables and receivable investments

Drake Paper Company sells on terms of net 30. The firm's variable cost ratio is 0.80. a. If annual credit sales are $20 million and its accounts receivable average 15 days overdue, what is Drake's investment in receivables? b. Suppose that, as the result of a recession, annual credit sales decline by 10 percent to $18 mill

Problem 10: Great Lakes Co.'s Allowance for Bad Debts; net realizable value of AR

On January 1, 2009, the balance in Great Lakes Co.'s Allowance for Bad Debts account was $5,200. During the year, a total of $3,500 of delinquent accounts receivable were written off as bad debts. The balance in the Allowance for Bad Debts account at December 31, 2009, was $7,300. (a.) What was the total amount of bad debts

Audit: Operational reviewer attributes

The operational reviewer typically has multiple personal attributes that make them and mold them into operational reviewer. List and describe at least three and tell why they are positive attributes for the operational reviewer.

Take the Cash Discount vs Annual Interest at the bank?

Lets say company A is analyzing the following: It costs them 25.5% if they give up a cash discount that is being offered by a supplier. The local bank offers them an annual interest of 14%. What should they do? Take the discount? or Take the local bank's loan of 14%?