EBK AUDITING+ASSURANCE SERVICES
EBK AUDITING+ASSURANCE SERVICES
17th Edition
ISBN: 9780135171219
Author: ARENS
Publisher: PEARSON CO
Question
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Chapter 16, Problem 39ICA

a.

To determine

List the relationship, ratio, and trend for reasonableness of accounts payable.

b.

To determine

Explain the test of details of balances audit program for accounts payable.

c.

To determine

Explain the effects of test of details of balances in audit procedure.

d.

To determine

Develop the audit schedule to determine the misstatements for each difference.

e.

To determine

Calculate the estimated misstatement in income statement.

f.

To determine

Estimate the total misstatements in accounts payable.

g.

To determine

Provide conclusion about the fairness of the recorded balance in accounts payable, and its effect.

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Grass Reed Bayou is a bottling company in The Netherlands. The company uses a normal costing system in which factory overhead is applied on the basis of direct labor costs. Budgeted factory overhead for the year was $680,000, and management budgeted $320,000 of direct labor costs. During the year, the company incurred the following actual costs. Direct materials used $ 382,000 Direct labor 313,000 Factory overhead 650,700 The January 1 balances of inventory accounts are shown below. Materials-all direct $ 64,000 Work-in-process 41,400 Finished goods 25,600 The December 31 balances of these inventory accounts were ten percent lower than the balances at the beginning of the year. The cost of goods manufactured during the year is:
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Grass Reed Bayou is a bottling company in The Netherlands. The company uses a normal costing system in which factory overhead is applied on the basis of direct labor costs. Budgeted factory overhead for the year was $680,000, and management budgeted $320,000 of direct labor costs. During the year, the company incurred the following actual costs. Direct materials used    $ 382,000Direct labor    313,000Factory overhead    650,700The January 1 balances of inventory accounts are shown below. Materials-all direct    $ 64,000Work-in-process    41,400Finished goods    25,600The December 31 balances of these inventory accounts were ten percent lower than the balances at the beginning of the year. The cost of goods manufactured during the year is:
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