As an auditor for the CPA firm of Hinkson and Calvert, you encounter the following situations in auditing different clientsNovak Corp. is a closely held corporation whose stock is not publicly traded. On December 5, the corporation acquired landby issuing 3,000 shares of its $20 par value common stock. The owners asking price for the land was $130,000, and the fairvalue of the land was $115,500.1.2Prepare the journal entries for each of the situations above. (Credit account titles are automatically indented when amount is entered. Donot indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts)Account Titles and ExplanationNo.1.Crane Company is a publicly held corporation whose common stock is traded on the securities markets. On June 1, it acquiredland by issuing 20,000 shares of its $10 par value stock. At the time of the exchange, the land was advertised for sale at$271,500. The stock was selling at $11 per share.2.Dates>DebitCredit

Journal Entry is the primary step to record the transaction in the books of accounts. The increase…

Answered: As an auditor for the CPA firm of…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Glacier Products Inc. is a wholesaler of rock climbing gear. The company began operations on January 1, 20Y3. The following transactions relate to securities acquired by Glacier Products Inc., which has a fiscal year ending on December 31, 20Y3: 20Y3 Jan. 25 Purchased 66,500 shares of Helsi Co. common stock for $640,000. There are 190,000 shares of Helsi Co. stock outstanding. Dec. 31 Received $19,000 of cash dividends on Helsi Co. stock. Helsi Co. reported net income of $78,000 in 20Y3. Required: 1. Journalize the entries to record the preceding transactions. If an amount box does not require an entry, leave it blank. Date Description Debit Credit 20Y3 Jan. 25 fill in the blank 2 fill in the blank 3 fill in the blank 5 fill in the blank 6 Dec. 31-Dividends fill in the blank 8 fill in the blank 9 fill in the blank 11 fill in the blank 12 Dec. 31-Income fill in the blank 14 fill in the blank 15 fill in the blank…
You have reviewed the work performed by your assistant, Samson Chow, on the audit of Bexca Ltd for the year ended 30 June 2018 and have noted the following two independent matters: (i)In testing investments in listed securities, Samsonselected all shareholdings with a market value above $200,000 and checked them to the closing market value reported by the Australian Stock Exchange to determine the net realisable value of each shareholding. The items tested totalled $5,500,000, or 60% of the total balance. Of the items tested, only one error of $110,000 was discovered. Samsonconcluded that the error was not itself material, as only 2% of the balance was tested. He extrapolated this error to the total population and estimated that the error for the total population would be $185,000, which was also immaterial. Therefore, he concluded that the investments in listed securities were fairly stated at the lower of cost or net realisable value. (ii)Bexca Ltd has 1,000 stock lines that are…
The statement of financial position (balance sheet) of Omni-Pave Company reports assets of $7,800,000. Ellen Martin advises you that a major accounting firm has audited the statements and attested that they were prepared in accordance with Generally Accepted Accounting Principles. She tells you that she can buy the total owner's interest in the business for only $5,400,000 and is seriously considering the opportunity. She says that the auditor's unqualified opinion validates the $7,800,000 value of the assets. Ellen believes she would be foolish to pass up the opportunity to purchase the assets at a price of only $5,400,000. What part of the accounting equation is Ellen failing to consider? Comment on Ellen's misconceptions regarding the auditor's role in providing information that is useful in making investment decisions.
Audit strategy must include: Characteristics of the engagement (Scope) Timing of reporting Materiality Risk assessment procedures performed Audit approach
Which publicly traded companies must have their financial statements and internal controls audited by independent auditors in accordance with Generally Accepted Auditng Standards (GAAS)? All public companies that will recognize a loss in the current year Wendy's All public companies that have generated $50 million in revenue or more Apple All of these are correct
. The common stock of Wilson, Inc. is owned by 20 stockholders. Doe & Doe, CPAs audited Wilson's financial statements as of December 31, 2017. The audit firm rendered an unqualified opinion on the financial statements. Relying on Wilson's financial statements, which showed net income for 2017 of $1,500,000, Peters purchased 10,000 shares of Wilson stock for $200,000 on April 10, 2018. Wilson's financial statements contained material misstatements. Because Doe & Doe did not carefully follow professional auditing standards, it did not discover that the statements failed to reflect unrecorded expenses, which reduced Wilson's actual net income to $800,000. After disclosure of the corrected financial statements, Peters sold his shares for $100,000, which was the highest price he could obtain. Peters has brought an action against Doe & Doe under federal securities law and common law. Answer the following, setting forth reasons for your conclusions: Will Peters prevail on his…
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You are the audit partner of John& Co., a large audit firm that is operating in sydney. Your firm audited ABC Ltd, a custom-made products manufacturing company. ABC Ltd declared bankruptcy within six months of receiving an unqualified auditor's opinion on its financial statements for the year ended 31 December 2018. The XYZ bank initiated a court challenge against your firm on the grounds that the bank disbursed a $2,500,000 loan to ABC Ltd in May 2019, but ABC went bankrupt shortly afterwards. The plaintiff alleged that your firm's 2018 audit of ABC was deficient and argued that the auditors failed to uncover that the value of ABC's inventories were substantially lower than reported on the balance sheet. Your audit firm did not issue privity letters to any third party in the past four years. With reference to the principles established in common law, explain whether the XYZ bank is likely to be successful
View Policies Show Attempt History Current Attempt in Progress Your answer is partially correct. As an auditor for the CPA firm of Hinkson and Calvert, you encounter the following situations in auditing different clients. Pina Colada Corp. is a closely held corporation whose stock is not publicly traded. On December 5, the corporation acquired land by issuing 3,000 shares of its $20 par value common stack. The owners' asking price for the land was $135,000, and the fair value of the land was $115,500. 1. 2. Cullumber Company is a publicly held corporation whose common stock is traded on the securities markets. On June 1, it acquired land by issuing 19,500 shares of its $10 par value stock. At the time of the exchange, the land was advertised for sale at $267,500. The stock was selling at $11 per share. Prepare the journal entries for each of the situations above. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required,…
Rios Co. is a regional insurance company that began operations on January 1, 20Y2. The following selected transactions relate to investments acquired by Rios Co., which has a fiscal year ending on December 31: Record these transactions on page 10: 20Y2 Feb. 1 Purchased 6,600 shares of Caldwell Inc. common stock at $43 per share plus a brokerage commission of $660. Caldwell has 100,000 shares of common stock outstanding. May 1 Purchased securities of Holland Inc. as a trading investment for $82,998. July 1 Sold 3,430 shares of Caldwell Inc. for $41 per share less a $115 brokerage commission. 31 Received an annual dividend of $0.25 per share on 3,170 shares of Caldwell Inc. stock. Nov. 15 Sold the remaining shares of Caldwell Inc. for $44 per share less a $95 brokerage commission. Dec. 31 The trading securities of Holland Inc. have a fair value on December 31 of $74,343. Record these transactions on page 11: 20Y3 Apr. 1 Purchased…

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