The net realizable value and inventory Arlington Supplies Ltd. manufactures and sells cardboard boxes.The stock of boxes was included in the closing inventory as ofDecember 31, 2010, at a cost of $65 each per bundle.During the final audit, the auditors noted that the subsequentsale price for the inventory on January 20, 2011, was $50 perbundle. Additionally, an inquiry revealed that during the physicalstock take, a storage issue led to minor water damage, affectingthe structural integrity of the boxes. As a result, ArlingtonSupplies Ltd. spent $18 per bundle for drying and reinforcing theboxes.The net realizable value and inventory write-down (loss) amountto:(a) $50 and $15 respectively.(b) $47 and $18 respectively.(c) $32 and $33 respectively.(d) $40 and $25 respectively.(e) $35 and $30 respectively.

Step 1: Definition of Net Realizable Value (NRV)Net realizable value (NRV) is the estimated selling…

Answered: Arlington Supplies Ltd. manufactures…

Auditing: A Risk Based-Approach (MindTap Course List)

11th Edition

ISBN:9781337619455

Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Publisher:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Chapter15: Audit Reports For Financial Statement Audits

Section: Chapter Questions

Problem 19RQSC

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The first audit of the books of Marin Company was made for the year ended December 31, 2021. In examining the books, the auditor found that certain items had been overlooked or incorrectly handled in the last 3 years. These items are: 1. At the beginning of 2019, the company purchased a machine for $468,000 (salvage value of $46,800) that had a useful life of 6 years. The bookkeeper used straight-line depreciation but failed to deduct the salvage value in computing the depreciation base for the 3 years. 2. At the end of 2020, the company failed to accrue sales salaries of $50,000. 3. A tax lawsuit that involved the year 2019 was settled late in 2021. It was determined that the company owed an additional $80,000 in taxes related to 2019. The company did not record a liability in 2019 or 2020 because the possibility of loss was considered remote, and charged the $80,000 to a loss account in 2021. 4. Marin Company purchased a copyright from another company early in 2019…
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In 2018, internal auditors discovered that PKE Displays, Inc., had debited an expense account for the $350,000 cost of a machine purchased on January 1, 2015. The machine's useful life was expected to be five years with no residual value. Straight-line depreciation is used by PKE. Ignoring income taxes, prepare the journal entry PKE will use to correct the error. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) No Event 1 1 Equipment Accumulated depreciation Retained earnings Answer is not complete. General Journal Debit Credit 350,000
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3) b) During the audit, the team has identified the following errors: profit before tax for PSG is estimated at $3,000,000 for the year ended June 30, 2020, An error of $3,000 was found in the audit of depreciation expense of the warehouse purchased in January 2020. The management of PSG have indicated that they do not wish to amend the financial statements. i. An error of $350,000 in the valuation of work in progress was found as a number of the assumptions contain out of date information. The management of PSG have indicated that they do not wish to amend the ii. financial statements. Calculate Performance Materiality and utilize this to discuss the appropriate treatment of the above two errors.
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The first audit of the books of Coronado Company was made for the year ended December 31, 2026. In examining the books, the auditor found that certain items had been overlooked or incorrectly handled in the last 3 years. These items are: 1. 2. 3. 4. 5. At the beginning of 2024, the company purchased a machine for $510,000 (salvage value of $51,000) that had a useful life of 6 years. The bookkeeper used straight-line depreciation but failed to deduct the salvage value in computing the depreciation base for the 3 years. At the end of 2025, the company failed to accrue sales salaries of $45,000. A tax lawsuit that involved the year 2024 was settled late in 2026. It was determined that the company owed an additional $81,000 in taxes related to 2024. The company did not record a liability in 2024 or 2025 because the possibility of loss was considered remote, and charged the $81,000 to a loss account in 2026. Coronado Company purchased a copyright from another company early in 2024 for…

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