EBK AUDITING & ASSURANCE SERVICES: A SY
10th Edition
ISBN: 9781259293245
Author: Jr
Publisher: MCGRAW HILL BOOK COMPANY
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Chapter 18, Problem 18.27P
To determine
Introduction:Auditors’ report is a document prepared by the auditor to check whether the financial statements of the company are prepared according to the generally accepted accounting principal or not. The auditor is responsible to check the accuracy of the accounts prepared by the company.
To prepare:Audit report in the given case.
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Ambrose is auditing the financial statements of Mays (dated December 31, 2017). The date of the auditor’s report is February 17, 2018, and the audit report release date is February 20, 2018. For which of the following matters would Ambrose have the least responsibility?a. The obsolescence of inventory held on December 31, 2017, that was identified on January 20, 2018.b. A customer’s deteriorating financial condition that was identified on February 19, 2018.c. A merger that was announced by Mays and known by Ambrose on February 12, 2018.d. A major loss due to a catastrophe that occurred and was known by Ambrose on March 1, 2018.
Scope Limitations. Following are four possible scenarios that reflect scope limitations encountered by J. Bruce, CPA, during the audit of Weaver Inc. In all cases, assume that the ending balance in inventory is material to Weaver’s financial position, results of operations, and cash flows.∙ Scenario A. Because of the late appointment to the audit engagement, Bruce is unable to observe Weaver’s physical inventory for the year ended December 31, 2017. However, Weaver maintains extensive perpetual inventory records, and Bruce has been able to perform other substantive procedures and is satisfied as to the fairness of the ending inventory balance for December 31, 2017.∙ Scenario B. Because of the late appointment to the audit engagement, Bruce is unable to observe Weaver’s physical inventory for the year ended December 31, 2017. Because Weaver’s accounting records are not complete, Bruce is unable to perform other substantive procedures and is not satisfied as to the fairness of the ending…
During the course of the audit, the following additional information was obtained:
a.
The trading securities were acquired on December 31, 2011. The securities have a fair value of P67,000 at
December 31, 2012.
b.
In discussion with the company officials, it was determined that the doubtful accounts expense rate based on net sales should be reduced to 2% from 3%, effective January 1, 2012.
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As a result of errors in the physical count, inventories were overstated by P12,000 at December 31, 2011 and by P17,500 at December 31, 2012.
d.
On January 1, 2011, the cost of equipment purchased for P30,000 was debited to repairs and maintenance. PRTC depreciates equipment of this type by the straight-line method over a five-year life with no residual value.
e.
On July 1, 2012, fully depreciated equipment purchased for P21,000, was sold as scrap for P2,500. The only entry PRTC made was to debit cash and credit property and equipment for the scrap proceeds. The property and equipment (net) had a…
Chapter 18 Solutions
EBK AUDITING & ASSURANCE SERVICES: A SY
Ch. 18 - Prob. 18.1RQCh. 18 - Prob. 18.2RQCh. 18 - Prob. 18.3RQCh. 18 - Prob. 18.4RQCh. 18 - Prob. 18.5RQCh. 18 - Prob. 18.6RQCh. 18 - Prob. 18.7RQCh. 18 - Prob. 18.8RQCh. 18 - Prob. 18.9RQCh. 18 - Prob. 18.10MCQ
Ch. 18 - Prob. 18.11MCQCh. 18 - Prob. 18.12MCQCh. 18 - Prob. 18.13MCQCh. 18 - Prob. 18.14MCQCh. 18 - Prob. 18.15MCQCh. 18 - Prob. 18.16MCQCh. 18 - Prob. 18.17MCQCh. 18 - Prob. 18.18MCQCh. 18 - Prob. 18.19MCQCh. 18 - Prob. 18.20MCQCh. 18 - Prob. 18.21MCQCh. 18 - Prob. 18.22PCh. 18 - Prob. 18.23PCh. 18 - Prob. 18.24PCh. 18 - Prob. 18.25PCh. 18 - Prob. 18.26PCh. 18 - Prob. 18.27PCh. 18 - Prob. 18.28P
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