In confirming accounts receivable on December 31, 2009, the author found 15 discrepancies between the customers' records

Auditing P 5-22 In confirming accounts receivable on December 31, 2009, the author found 15 discrepancies between the customers' records and the recorded amounts in the accounts receivable master file. A copy of all confirmations that had exceptions was turned over to the company controller investigate the reason for the difference. He, in turn, had the bookkeeper perform the analysis. The bookkeeper analyzed each exception., determined its cause, and prepared an elaborate spreadsheet explaining exceptions were caused by timing differences in the bookkeeper's report indicated that the exceptions were caused by timing differences in the clients' and customer's records. The auditor reviewed the spreadsheet and concluded that there were no material exceptions to accounts receivable.

Two years subsequent to the audit, it was determined that the bookkeeper had stolen thousands of dollars in the past 3 years by taking cash and overstating accounts receivable. In a lawsuit by the client against the CPA, an examination of the auditors December 31, 2009, accounts receivable working papers, which were subpoenaed by the court, indicated that one of the explanations in the bookkeeper's analysis of the exceptions was fictitious. The analysis stated the exception was caused by a sales allowance granted to the customer for defective merchandise the day before the end of the year. The difference was actually caused by the bookkeeper's theft.

Required:
a. What are the legal issues involved in this situation? What should the auditor use as a defense in the event that he is sued?
b. What was the CPA's deficiency in conducting the audit of accounts receivable?


Click here for the solution: In confirming accounts receivable on December 31, 2009, the author found 15 discrepancies between the customers' records

Exman Company performed a study of its billing and collection procedures and found that an average of 8 days elapses

Exman Company performed a study of its billing and collection procedures and found that an average of 8 days elapses between the time when a customer’s payment is received and when the funds become usable by the firm. The firm’s annual sales are $540 million.

a. Assuming that Exman could reduce the time required to process customer payments by 1.5 days, determine the increase in the firm’s average cash balance.

b. Assuming that these additional funds could be used to reduce the firm’s outstanding bank loans (current interest rate is 8 percent) by an equivalent amount, determine the annual pretax savings in interest expenses.


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Some of the information found on a detail inventory card for Slatkin Inc. for the first month of operations is as follows

P8-5 (Compute FIFO, LIFO, and Average Cost) Some of the information found on a detail inventory card for Slatkin Inc. for the first month of operations is as follows.

Instructions
(a) From these data compute the ending inventory on each of the following bases. Assume that perpetual inventory records are kept in units only. Carry unit costs to the nearest cent and ending inventory to the nearest dollar.
1. First-in, first-out (FIFO).
2. Last-in, first-out (LIFO).
3. Average cost.
(b) If the perpetual inventory record is kept in dollars, and costs are computed at the time of each withdrawal, would the amounts shown as ending inventory in 1, 2, and 3 above be the same? Explain and compute.

Click here for the solution: Some of the information found on a detail inventory card for Slatkin Inc. for the first month of operations is as follows

Beacon Company maintains and repairs warning lights, such as those found on radio towers and lighthouses

Problem 4-1A Financial Statements and Closing Entries

Beacon Company maintains and repairs warning lights, such as those found on radio towers and lighthouses. Beacon Company prepared the end-of-period spreadsheet shown below at October 31, 2012, the end of the current fiscal year.

AND SO ON

Instructions
1. Prepare an income statement for the year ended October 31.
2. Prepare a statement of owner's equity for the year ended October 31. No additional investments were made during the year.
3. Prepare a balance sheet as of October 31.
4. Based upon the end-of-period spreadsheet, journalize the closing entries.
5. Prepare a post-closing trial balance.

Check: 3. Total Assets: $239,500

Click here for the solution: Beacon Company maintains and repairs warning lights, such as those found on radio towers and lighthouses

Where can authoritative iGAAP related to the accounting for pensions be found?

Where can authoritative iGAAP related to the accounting for pensions be found?

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Discuss where can authoritative iGAAP guidance to leases be found?

Discuss where can authoritative iGAAP guidance to leases be found? Discuss at least two differences between iGAAP and US GAAP in regard to leases.

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