Question:45 Before issuing a report on the compilation of financial statements of a nonpublic entity, the accountant should:a. Apply analytical procedures to selected financial data to discover any material misstatements. b. Corroborate at least a sample of the assertions management has embodied in the financial statements. c. Inquire of the client's personnel whether the financial statements omit substantially all disclosures. d. Read the financial statements to consider whether the financial statements are free from obvious material errors. Kaffen Company, a ski tuning, and repair shop, opened on November 1, 2013. The company carefully kept track of all its cash receipts and cash payments. The following information is available at the end of the ski season, April 30, 2014. Issuance of common shares Payment to purchase repair shop equipment Rent payments Newspaper advertising payment Cash Receipts Cash Payments $ 22,000 $9,100 1,260 370 Utility bill payments 920 Part-time helper's wage payments 2,900 Income tax payment 10,200 Cash receipts from ski and snowboard repair 31,830 services Subtotals 53,830 24,750 Cash balance 29,080 Totals $53,830 $53,830 The repair shop equipment was purchased on November 1 and has an estimated useful life of 5 years. The company rents space at a cost of $180 per month on a one-year lease. The lease contract requires payment of the first and last months' rent in advance, which was done. The part- time helper is owed $530 on April 30, 2014, for unpaid wages. On April 30, 2014, customers owe Kaffen Company $480 for services they have received but have not yet paid for.1. Prepare an accrual-basis income statement for the 6 months ended April 30, 2014.2. Prepare April 30, 2014, classified balance sheet.

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
Chapter14: Completing A Quality Audit
Section: Chapter Questions
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Question:45
Before issuing a report on the compilation of financial
statements of a nonpublic entity, the accountant should:a.
Apply analytical procedures to selected financial data to
discover any material misstatements.
b. Corroborate at least a sample of the assertions
management has embodied in the financial statements.
c. Inquire of the client's personnel whether the financial
statements omit substantially all disclosures.
d. Read the financial statements to consider whether the
financial statements are free from obvious material errors.
Kaffen Company, a ski tuning, and repair shop, opened on
November 1, 2013. The company carefully kept track of all
its cash receipts and cash payments. The following
information is available at the end of the ski season, April
30, 2014.
Issuance of common shares
Payment to purchase repair shop equipment
Rent payments
Newspaper advertising payment
Cash
Receipts
Cash
Payments
$ 22,000
$9,100
1,260
370
Utility bill payments
920
Part-time helper's wage payments
2,900
Income tax payment
10,200
Cash receipts from ski and snowboard repair
31,830
services
Subtotals
53,830
24,750
Cash balance
29,080
Totals
$53,830
$53,830
The repair shop equipment was purchased on November 1
and has an estimated useful life of 5 years. The company
rents space at a cost of $180 per month on a one-year
lease. The lease contract requires payment of the first and
last months' rent in advance, which was done. The part-
time helper is owed $530 on April 30, 2014, for unpaid
wages. On April 30, 2014, customers owe Kaffen Company
$480 for services they have received but have not yet paid
for.1. Prepare an accrual-basis income statement for the 6
months ended April 30, 2014.2. Prepare April 30, 2014,
classified balance sheet.
Transcribed Image Text:Question:45 Before issuing a report on the compilation of financial statements of a nonpublic entity, the accountant should:a. Apply analytical procedures to selected financial data to discover any material misstatements. b. Corroborate at least a sample of the assertions management has embodied in the financial statements. c. Inquire of the client's personnel whether the financial statements omit substantially all disclosures. d. Read the financial statements to consider whether the financial statements are free from obvious material errors. Kaffen Company, a ski tuning, and repair shop, opened on November 1, 2013. The company carefully kept track of all its cash receipts and cash payments. The following information is available at the end of the ski season, April 30, 2014. Issuance of common shares Payment to purchase repair shop equipment Rent payments Newspaper advertising payment Cash Receipts Cash Payments $ 22,000 $9,100 1,260 370 Utility bill payments 920 Part-time helper's wage payments 2,900 Income tax payment 10,200 Cash receipts from ski and snowboard repair 31,830 services Subtotals 53,830 24,750 Cash balance 29,080 Totals $53,830 $53,830 The repair shop equipment was purchased on November 1 and has an estimated useful life of 5 years. The company rents space at a cost of $180 per month on a one-year lease. The lease contract requires payment of the first and last months' rent in advance, which was done. The part- time helper is owed $530 on April 30, 2014, for unpaid wages. On April 30, 2014, customers owe Kaffen Company $480 for services they have received but have not yet paid for.1. Prepare an accrual-basis income statement for the 6 months ended April 30, 2014.2. Prepare April 30, 2014, classified balance sheet.
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