a. Your audit firm has been the statutory auditors for Apenkwa Co. Ltd. for the last three years. Thecompany prepares its financial statements to December 31 each year. Apenkwa Co. is intoproduction of consumable goods. Apenkwa has 20 wholesalers and 73 retailers for which goodsare sold to. During the year ended 31st December, 2018, all the 12,503 consumable goods producedwere sold.Selling price for one good is GHC 100 (that is GHC 1,250,300 for total sales value) but only GHO1,200,300 is shown in the cash book account.RequiredAs an auditor of your firm, state the audit work you would carry out to obtain audit evidence irreference to above case

An audit is the assessment or investigation of different books of records by an inspector followed…

Answered: a. Your audit firm has been the…

Financial Accounting

14th Edition

ISBN:9781305088436

Author:Carl Warren, Jim Reeve, Jonathan Duchac

Publisher:Carl Warren, Jim Reeve, Jonathan Duchac

Chapter17: Financial Statement Analysis

Section: Chapter Questions

Problem 2CP

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Similar questions

Your audit firm has been the statutory auditors for Apenkwa Co. Ltd. for the last three years. The company prepares its financial statements to December 31 each year. Apenkwa Co. is into production of consumable goods. Apenkwa has 20 wholesalers and 73 retailers for which goods are sold to. During the year ended 31st December, 2018, all the 12,503 consumable goods produced were sold.Selling price for one good is GHC 100 (that is GHC 1,250,300 for total sales value) but only GHC 1,200,300 is shown in the cash book account.RequiredAs an auditor of your firm, state the audit work you would carry out to obtain audit evidence in reference to above case
Michael Corporation is on a calendar year basis. The following data were found during your audit:1) An excerpt from the client’s trial balance revealed the following account balances:Accounts receivable P 80,000Inventory, per count 1,200,000Accounts payable 790,000Net sales 6,050,000Net purchases 3,300,000Net income 610,0002) The client conducted an inventory count on December 31, 2021. Michael Corporation normally sells at 30% gross profit based on selling price.3) Goods were in transit FOB destination from a supplier in the amount of P120,000. Further testing revealed that the suppliers invoice pertaining to the delivery was received and recorded on December 28, 2021.4) Good costing P70,000 had been received on December 31, and recorded as a purchase. However, upon your inspection, the goods were found to be defective and would be immediately returned.5) Materials costing P224,000, sold and billed on December 30 under a “bill and hold” agreement, had been segregated in the warehouse…
C Ltd is a company in the chemical industry, situated near the Eden Lake. Its year end is 30th June 2022 and you were engaged as the auditor on that date. The profit before taxation shown in the draft accounts to 30th June is $23,000,000. The following matters have come to your attention: There has been a downturn in sales prices in July 2022, with the result that a portion of the inventory on hand at 30th June 2022 will be sold at below cost. Management have advised that there is an excess of cost over net realisable value amounts in total to $100,000 With reference to relevant audit standards, identify the business risk and outline any resulting potential audit risks that may require further investigation.
Michael Corporation is on a calendar year basis. The following data were found during your audit: 1) An excerpt from the client’s trial balance revealed the following account balances:Accounts receivable P 80,000Inventory, per count 1,200,000Accounts payable 790,000Net sales 6,050,000Net purchases 3,300,000Net income 610,000 2) The client conducted an inventory count on December 31, 2021. Michael Corporation normally sells at 30% gross profit based on selling price. 3) Goods were in transit FOB destination from a supplier in the amount of P120,000. Further testing revealed that the supplier's invoice pertaining to the delivery was received and recorded on December 28, 2021. 4) Good costing P70,000 had been received on December 31 and recorded as a purchase. However, upon your inspection, the goods were found to be defective and would be immediately returned. 5) Materials costing P224,000, sold and billed on December 30 under a “bill and hold” agreement, had been segregated in the…
TS Quilts Inc. took a physical inventory at the end of the year and determined that $414,000 of goods were on hand. TS Inc. determined that $12,000 of goods held and included in the court were being held on consignment from PDJ outlet. Additionally, because of high rates of return on some products, TS has established an estimate of items that will be returned of $17,000. What amount should TS report in their year-end balance sheet for the inventory account?
The management of Bartleby Graduate Co. has engaged you to assist in the preparation of year-end (December 31) financial statements. You are told that on November 30, the correct inventory level was 145,730 units. During the month of December, sales totaled 138,630 units including 40,000 units shipped on consignment to Course Hero Certification Corp. A letter received from Course Hero indicates that as of December 31, it has sold 11,000 units and was still trying to sell the remainder. A review of the December purchase orders to various suppliers shows the following. Bartleby Graduate Co. uses the "passing of legal title" for inventory recognition. Purchase Invoice Date Quantity in Date Shipped Date Received Terms Order Date Units 12/31/20 12/05/20 12/06/20 12/18/20 12/22/20 01/02/21 01/02/21 01/03/21 12/20/20 01/05/21 01/07/21 01/02/21 12/17/20 01/05/21 12/29/20 01/04/21 4,200 01/05/21 12/22/20 01/07/21 01/02/21 01/06/21 01/07/21 FOB Destination 3,600 FOB Destination FOB Shipping…
During the course of the Year 2 audit of Chester Co., the auditor discovered potential cutoff problems that may or may not require adjusting journal entries. For each of the potential cutoff problems indicated below, complete the required journal entries. To prepare each required journal entry: 1. The company shipped merchandise with a carrying amount of $75,000 FOB destination on December 23, Year 2, and recorded the sale and relief of inventory on that date. The customer received the merchandise on December 31, Year 2. The merchandise has a gross profit margin of 10%. Record the necessary Year 2 adjustments, if any. 2. The company shipped merchandise with a carrying amount of $45,000 to a consignee on December 24, Year 2, and recorded the sale and the relief of inventory on that date. The consignee had not sold the merchandise as of January 5, Year 3. The merchandise has a gross profit margin of 10%. Record the necessary Year 2 adjustments, if any. 3. At the beginning of Year 2, the…
In conducting your audit of Mangatarem Corporation, a company engaged in import and wholesale business, for the fiscal year ended June 30, 2006, you determined that its internal control system was good. Accordingly, you observed the physical inventory at an interim date, May 31, 2006 instead of at June 30, 2006. You obtained the following information from the company's general ledger: Sales for eleven months ended May 31, 2006 (before audit adjustments) P1,615,000 Sales for the fiscal year ended June 30, 2006 (before audit adjustments) 1,843,000 Purchases for eleven months ended May 31, 2006 (before audit adjustments) 1,296,000 Purchases for the fiscal year ended June 30, 2006 1,536,000 Inventory, July 1, 2005 170,200 Physical inventory, May 31, 2006 264,000 Your audit disclosed the following additional information. 1) Shipments costing P12,000 were received in May and included in the physical inventory but recorded as June purchases. 2) Deposit of P4,000 made with vendor and charged…
HACHING Company suspects that there is missing inventory in its warehouse at December 31, 2021. All sales and purchases were made on account. Also, the gross profit ratebased on net sales is consistent every year. To aid in your investigation, you obtained the following: How much is the net sales revenue for the year?
Butter Company took a physical inventory at the end of the year and determined that $190,000 of goods were on hand. In addition, the entity determined that $24,000 of goods purchased were in transit shipped FOB destination. The goods were actually received three days after the inventory count. The entity sold $10,000 worth of inventory FOB destination. Such inventory is in transit at year-end. What amount should be reported as inventory at year-end?
The accountant for Dolfin Company prepared the following income statement. The auditor has asked you to use this statement to provide additional information to Dolfin Company on the Final Questions panel. Dolfin Company Income Statement For the Year Ended December 31, 2020 1 Sales $316,840.00 2 Expenses: 3 Cost of merchandise sold $215,451.20 4 Selling expenses 41,189.20 5 Administrative expenses 34,852.40 6 Interest expense 275.00 7 Total expenses 291,767.80 8 Net income $25,072.20 Final Questions The auditor has asked you to prepare additional information about Dolfin Company’s results for last year. Use the data shown on the income statement in your computations. 1. Compute the operating expenses for Dolfin Company. 2. Compute the gross profit for Dolfin Company. 3. Compute the income from operations for…
Butter Company took a physical inventory at the end of the year and determined that $190,000 of goods were on hand. In addition, the entity determined that $24,000 of goods purchased were in transit shipped FOB destination. The goods were actually received three days after the inventory count. The entity sold $10,000 worth of inventory FOB destination. Such inventory is in transit at year-end. What amount should be reported as inventory at year-end? Select one: a. $214,000 b. $190,000 c. $200,000 d. $224,000

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