You are evaluating audit results for current assets for your audit client Pepper Ltd. You take a random sample of inventory items worth $10,000 for price test and detect $1,000 worth of overstatements. The total carrying value of inventory is $100,000 and sampling error is $2,000. What is the total estimated misstatement for inventory account?

Q: You have been engaged to audit the financial statements of LUNA Corp for the year ended December 31,…

A: Adjusting entries are nothing but journal entries that are recorded at the end of the reporting…

Q: You are making a detailed analysis of the financial statements and accounting records of two…

A: Different companies value their inventories differently depending on the type of inventory,…

Q: The accountant for Murphy Company prepared the following analysis of its inventory at year end:…

A: Solution Ending inventory is the amount of the inventory which is not sold during a financial year…

Q: Analyze the Income Statement below. Complete the following: a) Calculate the relevant ratios…

A: A red flag is an alert or signal that a company's stock, financial statements, or news reports may…

Q: The 1,000 accounts receivable of Baker Company have a total book value of $60,000 (average book…

A: To Estimate the total audited value of an account, classical variable sampling is used. It is a…

Q: Following are independent cases. Please check the accounting treatments and given calculations…

A: Following are the answers to given questions

Q: When analytical procedures disclose unexpected changes in financial relationships relative to prior…

A: Analytical procedures are those procedures or processes which are being used by the auditor in order…

Q: You are auditing accounts receivable for a small company and have found the following results:…

A: Formula;Overstated amount=Book value of sample-Audit value of sample

Q: Determine the following as a result of your audit: a. What is the cost of ending inventories as of…

A: As per Accounting Standards/Principles Valuation of Inventories, inventories must be valued as…

Q: Sample Size Determination: Classical Variables Sampling. Shannon Solomon, CPA, isauditing the…

A: Sample size refers to the act of selecting the number of replicates for including the statistical…

Q: In an audit of Ingenious Company for the year ended December 31, 2013, the entity took its annual…

A: Inventory refers to the raw materials utilised in manufacturing as well as the finished goods that…

Q: The 2020 audit of Lane Company’s accounting records discloses the following information: 1. Next…

A: Accounts receivables represent the amount owed by the entity from its customers relating to supply…

Q: Sparrow Company uses the retail inventory method to estimate ending inventory and cost of goods…

A: Inventory Valuation:Companies use inventory valuation, an accounting technique, to determine the…

Q: The accounting department of the client reports that the balance of Accounts Receivable is $210,000.…

A: The concept used is classical variable sampling, which is a statistical sampling technique commonly…

Q: While spotting red flags is difficult, vertical and horizontal financial statement analysis…

A: Financial statement analysis helps in identifying trends and making comparisons. Analyzing financial…

Q: Which of the following would not be considered an analytical procedure?

A: The correct answer is: (A) Projecting an error rate by comparing the results of a statistical sample…

Q: Use the formulas you learned about in the previous stage of the problem to answer the following…

A: Ratio analysis is a quantitative method to know liquidity, operational efficiency, and profitability…

Q: Sterling Company reported their inventory as $50,700 on the books at December 31, 2021. At the close…

A: Correct amount of inventory is the value of the inventory which has been computed on the basis of…

Q: In the audit of Zhongli Inc. you have performed cutoff test, the results of the audit procedure you…

A: Consignment Accounting - This is the innovative way to selling the goods through a third party named…

Q: You have been hired by Johnson and Johnson Corp. this year. Your supervisor approaches you and need…

A: “Since you have posted a question with multiple sub parts, we will provide the solution only to the…

Q: : of a wholesale business that doe naintain perpetual inventory rds. Cravens has observed the

A: The correct answer is  a) Issue a disclaimer of opinion

Q: In the audit of the Worldwide Wholesale Company, you did extensive ratio and trend analysis as part…

A: Wholesa;e Company Trend Analysis Depreciation expenses may be understated for the year

Q: Substantive test of auditing inventory 1. Analytical procedure Make comparison between current…

A: "Since you have asked multiple question we will solve the first question for you.  If you want any…

Q: Required: An auditor is trying to figure out if the inventory at an electronics store is obsolete.…

A: Inventory obsolescence refers to the condition where goods held in inventory become outdated, no…

Q: E8.2 (LO 2)  (Inventoriable Goods and Costs) In your audit of Jose Oliva Company, you find that a…

A: The term inventory refers to both raw materials used in manufacturing and finished goods that are…

Q: Assume that you have been hired to work as an accountant in ASDA at 1/12/2020 and you found that the…

A: Transaction Date Particulars Debit $ Credit $ 1 1/12 Accounts receivables 10,000       Sales…

Q: An auditor noted that client sales increased 10 percent for the year. At the same time, Cost of…

A:

Q: Net income for Mory Company for the years 2021 and 2022 is shown below. An audit of the accounts,…

A: Answer) Calculation of Correct Net Income for the year 2021   2021 Net Income After Tax…

Q: a. Compute the following ratios for Crazy Eddie during the period 1984-1987. See balance sheet and…

A: Note: We’ll answer the first question since the exact one wasn’t specified. Please submit a new…

Q: Write a using current ratio, acid-test ratio and Days' sales in receivables to do a memo explaining…

A: Solution 1-   Formula 2020 2019         Current Ratio Current assets/current liabilities 2.01…

Q: The 1,500 accounts receivable of DEF Company have a total book value of $30,000. Bob Smith,…

A: Projected misstatement for each sample = estimated a projected misstatement of an overstatement /…

Q: The 10,000 accounts receivable of DEF Company have a total book value of $120,000. A CPA has…

A: Accounts Receivable = 10,000Total book value = $120,000Sample of accounts receivables = 100Sample of…

Q: In 2016, the internal auditors of Development Technologies, Inc. discovered that a $4 million…

A: Inventory errors: It refers to the errors that result in overstatement or understatement of ending…

Q: During the taking of the physical inventory, the company inadvertently counted its inventory as…

A: Any increase in ending inventory decreases the cost of goods sold and profit will be increased. but…

Q: (General Inventory Issues) In January 2017, Susquehanna Inc. requested and secured permission from…

A: (a) Why should inventories be included in (1) a balance sheet and (2) the computation of net income?…

Q: 1. What is the correct net income for the year 2021? 2. What is the correct net income for the year…

A: 1. As it is stated that year end inventory of the year 2022 is understated by 25000, correcting this…

Q: What is the audited net sales balance? The following data are obtained from the single-entry records…

A: Net sales means the amount of revenue earned and it is calculated by deducting the sale return ,…

Q: 1. The auditors have sampled 100 accounts from a population of 500 accounts receivable. The sample…

A: Estimated audited value refers to the value of an asset, liability, or equity as determined by an…

Q: In fiscal year 2020, the company had accumulated inventory impairment of 2000. In fiscal year 2021,…

A: The objective of the question is to calculate the actual profit of the business in the fiscal year…

Q: List and explain the substaintive tests of Cash & Inventory

A: A substantive test is the audit procedure used by the auditors of the business in order to check the…

Q: List and explain the substantive tets of Cash and Inventory.

A: Substantive tests It is the procedures by which evidence is gathered by auditors. It is inclusive of…

Q: Gon Incorporated reported its inventory balance on December 31, 2016 at P5,000,000. During the…

A: 1) Purchase and sold in the same year as per the periodic system . No effect should be given 2)…

Q: Assume that you are preparing to confirm accounts receivable at December 31, 2025, which is one…

A: Accounts Receivable -All money owed by clients to you for products or services they have previously…

Q: The condensed statement of income of LUNA, Inc. for the year ended December 31, 2020 is presented…

A: Adjusting entries journal entries that are passed at the conclusion of a financial year in order to…

Q: Sandra: We are beginning our audit of Imex and have prepared ratio analyses to determine if there…

A: For accounting purposes, Inventory turnover is a measure of how efficiently the company is utilizing…

Q: A company uses the dollar-value LIFO method of computing inventory. An external price index is used…

A: Dollar-Value LIFO method is an accounting technique used for inventory that follows last in first…

Audit Procedures

Audit Procedures are methods and techniques performed by the auditor to determine the quality of financial information of clients, thereby expressing an opinion on true & fair view of financial statements and entity position. They are identified and applied at the planning stage of audit after determining audit objectives, scope, approach, and risk assessment.