Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN: 9781337788281
Author: James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher: Cengage Learning
expand_more
expand_more
format_list_bulleted
Videos
Textbook Question
Chapter 4, Problem 5C
It is February 16, 2020, and you are auditing Davenport Corporation's financial statements for 2019 (which will be issued in March 2020). You read in the newspaper that Travis Corporation, a major customer of Davenport, is in financial difficulty. Included in Davenport’s
Required:
From financial reporting and ethical perspectives, prepare a response to Jim Davenport regarding this issue.
Expert Solution & Answer
Trending nowThis is a popular solution!
Students have asked these similar questions
Ann Marcus, CPA, is performing an audit for one of her clients, Artistcraft Ltd., a glass factory, for its December 31, 2023, year end.
The audit program requires a substantive analytical procedure to be performed on the reasonableness of Artistcraft's interest
expense on its long-term debt.
Ann has identified the following information:
Long-term debt balance confirmed by the bank in prior-year file
Long-term debt balance confirmed by the bank in the current year
Interest rate per the bank confirmation
Balance per the general ledger
Performance materiality
(a)
$1,545,861
$1,427,529
6.25 %
$89,525
$7,000
Which of the following are true with respect to this analytic substantive procedure?
The balances of the long-term debt and the interest rate are taken from bank confirmations which is external, third
party evidence, and therefore highly reliable.
There is no need to need to consider the reliability of the underlying data when using analytical procedures.
This analytical procedure is a…
Ingalls Corporation is in the process of negotiating a loan for expansion purposes. The books and records have never been audited, and the bank has requested that an audit be performed. Ingalls has prepared the following comparative financial statements for the years ended December 31, 2020 and 2019:
1. Prepare the journal entries to correct the books at December 31, 2020. The book s for 2020 have not been closed. Ignore income taxes. 2. Prepare a schedule showing the computation of corrected net income for the years ended December 31, 2020 and 2019, assuming that any adjustments are to be reported on comparative statements for the 2 years. The first items on your schedule should be the net income for each year. Ignore income taxes. (Do not prepare financial statements.)
On June 30, 2021, the bank's records say that your company has $12,956.73 in its chequing account. You are aware of three
outstanding cheques for a total of $2,112.19. During June 2021, the bank rejected two deposited cheques from customers totalling
$654.19 because of insufficient funds and charged you $12.00 in service fees. You had not yet received notice about the bad cheques,
but you were aware of and have recorded the $12.00 of service fees, Prior to adjustment on June 30, 2021, your Cash account should
have a balance of:
Multiple Choice
$14,402.73.
$15,711.11.
$1,498.73.
$10,202.35.
< Prev
33 of 50
Next m
Chapter 4 Solutions
Intermediate Accounting: Reporting And Analysis
Ch. 4 - What is the accounting equation? The balance sheet...Ch. 4 - Prob. 2GICh. 4 - How does the balance sheet at the end of an...Ch. 4 - What does recognition mean in accounting?Ch. 4 - Prob. 5GICh. 4 - Prob. 6GICh. 4 - What is equity? How is equity determined?Ch. 4 - What is a mixed attribute measurement model? Why...Ch. 4 - Identify at least five alternatives for measuring...Ch. 4 - Identify at least three alternatives for measuring...
Ch. 4 - Prob. 11GICh. 4 - Prob. 12GICh. 4 - Prob. 13GICh. 4 - Prob. 14GICh. 4 - Prob. 15GICh. 4 - Prob. 16GICh. 4 - Define (a) common stock, (b) additional paid-in...Ch. 4 - Prob. 18GICh. 4 - Prob. 19GICh. 4 - What are investments by owners? Distributions to...Ch. 4 - What accounting policies are disclosed in the...Ch. 4 - Give several examples of financial instruments and...Ch. 4 - Prob. 23GICh. 4 - Prob. 24GICh. 4 - Prob. 25GICh. 4 - Prob. 26GICh. 4 - Prob. 27GICh. 4 - Prob. 28GICh. 4 - Prob. 29GICh. 4 - Prob. 30GICh. 4 - Prob. 31GICh. 4 - Prob. 32GICh. 4 - Prob. 33GICh. 4 - Prob. 34GICh. 4 - A donated fixed asset (from a governmental unit)...Ch. 4 - Prob. 2MCCh. 4 - Prob. 3MCCh. 4 - On October 2, 2020, a company borrowed cash and...Ch. 4 - Prob. 5MCCh. 4 - Rent revenue collected 1 month in advance should...Ch. 4 - Prob. 7MCCh. 4 - Prob. 8MCCh. 4 - Which of the following should be disclosed in the...Ch. 4 - Prob. 10MCCh. 4 - Prob. 1RECh. 4 - Dorothy Corporation had the following accounts in...Ch. 4 - Dorothy Corporation had the following accounts in...Ch. 4 - Based on the information in RE4-2 and RE4-3,...Ch. 4 - Prob. 5RECh. 4 - Oz Corporation has the following assets at...Ch. 4 - Prob. 7RECh. 4 - Prob. 8RECh. 4 - Scarecrow Inc. issues 50,000 shares of 2 par value...Ch. 4 - Tinman Corporation reports the following balances...Ch. 4 - Prob. 1ECh. 4 - Plant and Equipment Your analysis of Moen...Ch. 4 - GRAF CORPORATION Shareholders Equity Section of...Ch. 4 - Prob. 4ECh. 4 - Classifications on Balance Sheet The balance sheet...Ch. 4 - Balance Sheet Baggett Companys balance sheet...Ch. 4 - Prob. 7ECh. 4 - Balance Sheet Calculations Dawson Companys balance...Ch. 4 - Prob. 9ECh. 4 - Correction of Balance Sheet On December 31, 2019,...Ch. 4 - Prob. 11ECh. 4 - Prob. 12ECh. 4 - Classifications on Balance Sheet The current...Ch. 4 - Balance Sheet without Amounts The following is an...Ch. 4 - Prob. 3PCh. 4 - Prob. 4PCh. 4 - Balance Sheet Calculations Cornerstone Development...Ch. 4 - Prob. 6PCh. 4 - Complex Balance Sheet Presented below is the...Ch. 4 - Analyzing Starbuckss Balance Sheet Disclosures...Ch. 4 - Prob. 9PCh. 4 - Balance Sheet The following is a list (in random...Ch. 4 - Balance Sheet The following is an alphabetical...Ch. 4 - Balance Sheet from Adjusted Trial Balance The...Ch. 4 - Balance Sheet and Notes Listed here in random...Ch. 4 - Comprehensive: Balance Sheet, Schedules, and Notes...Ch. 4 - Use following formation for P4-15 and P4-16:...Ch. 4 - Ratios Analyses: McCormick Refer to the...Ch. 4 - Prob. 17PCh. 4 - Use the following information for P417 and P418:...Ch. 4 - Prob. 1CCh. 4 - It is the end of 2019 and you are an accountant...Ch. 4 - Prob. 3CCh. 4 - Valuation of Assets and Stock A friend has come to...Ch. 4 - It is February 16, 2020, and you are auditing...Ch. 4 - You are the accountant for Speedy Company and are...Ch. 4 - Prob. 7CCh. 4 - Prob. 8CCh. 4 - Situation You are the assistant accountant for...
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- what's the answer in question 4?arrow_forwardAssume that Kingbird Company has recently fallen into financial difficulties. By reviewing all available evidence on December 31, 2025, one of Kingbird's creditors, the National American Bank, determined that Kingbird would pay back only 65% of the principal at maturity. As a result, the bank decided that the loan was impaired. If the loss is estimated to be $242,200. What entry should National American Bank make to record this loss? (If no entry is required, select "No Entry" for the account titles and enter o for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually. List debit entry before credit entry.) Date Dec. 31, 2025 Account Titles and Explanation Debit Creditarrow_forwardNatalie decides that she cannot afford to hire John to do her accounting. One way that she can ensure that her cash account does not have any errors and is accurate and up-to-date is to prepare a bank reconciliation at the end of each month. Natalie would like you to help her. She asks you to prepare a bank reconciliation for June 2020 using the information below.Please refer to the image attached Additionally, take the following information into account. On June 30th, there were two outstanding checks: #595 for $238 and #604 for $297. Premier Bank made a posting error to the bank statement: Check #603 was issued for $425, not $452. The deposit made on June 20 was for $125, which Natalie received for teaching a class. Natalie made an error in recording this transaction. The electronic funds transfer (EFT) was for Natalie’s cell phone use. Remember that she uses this phone only for business. The NSF check was from Ron Black. Natalie received this check for teaching a class to Ron’s…arrow_forward
- One of the checks returned on January 15, 2022, dated December 31, 2021 for P2,000.00, for a 2021 operating expenses, was actually not written until January 3, 2022. This check appeared as one of the outstanding checks in the company’s bank reconciliation as at December 31, 2021. Requirement: Prepare adjusting entriesarrow_forwardCocoMelon Company is preparing its 2020 financial statement, accounting period ends on December 31. You have been asked to compute the amount included in the "Trade and Other Receivable" of the entity's financial position from the following information: A. A $10,000 check received from a customer dated February 1, 2021 is on hand. B. A customer's check for $20,000 was included in the December 20 deposit. It was returned by the bank stamped "NSF”. No entry had yet been made by Masaya to reflect the return. C. A $50,000 Certificate of Deposits on which $2,000 of interest accrued to December 31 has just been recorded by debiting Interest Receivable and crediting Interest Income. The chief accountant proposes to report the $50,000 as "Cash in Bank”. D. Masaya has a $5,000 petty cash fund. As of December 31, the fund custodian reported expense vouchers covering various expenses in the amount of $4,570 and cash of $420. E. Postage stamps that costs $100 are in the cash drawer. F. A cashier's…arrow_forwardUse the following information for the next 4 items: You were assigned to audit the borrowings of your client, Benedict Company, as of and for the year ended December 31, 2022. Upon examining their records, and inquiry with management, you have found out that the company has the following notes outstanding as of December 31, 2022: A 10%-note issued to Supreme Inc. in exchange for a second-hand delivery vehicle on June 30, 2022. The face amount of the note is P800,000 and is due on June 30, 2027. Interest is payable semi-annually every June 30 and December 31. On the date of issuance, the delivery vehicle does not have a reliable fair market value, and the annual prevailing market rate of interest at that time for notes with similar characteristics is 12%. A three-year 12% note issued to Ace Company with principal amount of P1,500,000 dated November 30, 2021. The principal is payable in three installments of P500,000 plus interest on outstanding balance every November 30, beginning on…arrow_forward
- You are the senior in charge of the audit of the accounts of the Domino Industries, Inc. You and your staff have just completed the field work relative to the December 31, 2020 audit. The adjusted trial balance and certain additional information related thereto appearing in your working papers are as follows: Cash 240,000 Marketable Securities 95,000 Investment in Affiliated Companies 350,000 Accounts Receivable (including P120,000 due after one year) 680,000 Subscription Receivable 20,000 Inventories - Finished Goods 620,000 - Goods in Process 155,000 - Raw Materials 470,000 Treasury Stock (cost of 100 shares) 11,000 Construction in Progress 220,000 Land 460,000 Buildings, Machinery and Equipment 4,350,000 Cash Surrender Value of Life Insurance 60,000 Prepaid Expenses 50,000 Pre-operating Expenses 120,000 Unamortized…arrow_forwardChris Nelson, the new assistant controller for Grand Company, is preparing for the firm’s year-end closing procedures. On December 30, 2019,a memorandum from the controller directed Nelson to make a journal entry debiting Cash and crediting Long-Term Advances to Officers for $1,000,000 . Not finding the $1,000,000 in the cash deposit prepared for the bank that day, Nelson went to the controller for a further explanation. In response, the controller took from her desk drawer a check for $1,000,000 payable to Grand Company from Jason Grand, chief executive officer of the firm. Attached to the check was a note from Jason Grand saying that if this check were not needed to return it to him next week. “This check is paying off a$1,000,000 advance the firm made to Jason Grand six years ago,”stated the controller.“ Mr.Grand has done this every year since the advance; each time we have returned the check to him in January of the following year. We plan to do so again this time. In fact, when…arrow_forwardYour client is preparing financial statements to show the bank. You know that he has incurred a refrigeration repair expense during the month, but you see no such expense on the books. When you question the client, he tells you that he has not yet paid the 1,255 bill. Your client is on the accrual basis of accounting. He does not want the refrigeration repair expense on the books as of the end of the month because he wants his profits to look good for the bank. Is your client behaving ethically by suggesting that the refrigeration repair expense not be booked until the 1,255 is paid? Are you behaving ethically if you agree to the clients request? What principle is involved here?arrow_forward
- Blue Company, an architectural firm, has a bookkeeper who maintains a cash receipts and disbursements journal. At the end of the year (2019), the company hires you to convert the cash receipts and disbursements into accrual basis revenues and expenses. The total cash receipts are summarized as follows. The accounts receivable from customers at the end of the year are 120,000. You note that the accounts receivable at the beginning of the year were 190,000. The cash sales included 30,000 of prepayments for services to be provided over the period January 1, 2019, through December 31, 2021. a. Compute the companys accrual basis gross income for 2019. b. Would you recommend that Blue use the cash method or the accrual method? Why? c. The company does not maintain an allowance for uncollectible accounts. Would you recommend that such an allowance be established for tax purposes? Explain.arrow_forwardOn February 15, 2019, Kate Collins, owner of Kate’s Cards, asks you to investigate the cash han-dling activities in her business. She believes that a new employee might be stealing funds. “I have no proof,” she says, “but I’m fairly certain that the January 31, 2019, undeposited receipts amounted to more than $12,000, although the January 31 bank reconciliation prepared by the cashier (who works in the treasurer’s department) shows only $7,238.40. Also, the January bank reconciliation doesn’t show several checks that have been outstanding for a long time. The cashier told me that these checks needn’t appear on the reconciliation because he had notified the bank to stop payment on them and he had made the necessary adjustment on the books. Does that sound reasonable to you?”At your request, Kate shows you the following (unaudited) January 31, 2019, bank reconciliation prepared by the cashierYou discover that the $1,200 unrecorded bank credit represents a note collected by the bank on…arrow_forwardI need help with this questions and I want to see how you got the answers.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- Intermediate Accounting: Reporting And AnalysisAccountingISBN:9781337788281Author:James M. Wahlen, Jefferson P. Jones, Donald PagachPublisher:Cengage Learning
College Accounting (Book Only): A Career ApproachAccountingISBN:9781337280570Author:Scott, Cathy J.Publisher:South-Western College Pub
Individual Income TaxesAccountingISBN:9780357109731Author:HoffmanPublisher:CENGAGE LEARNING - CONSIGNMENT 
Auditing: A Risk Based-Approach (MindTap Course L...AccountingISBN:9781337619455Author:Karla M Johnstone, Audrey A. Gramling, Larry E. RittenbergPublisher:Cengage Learning
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:Cengage Learning
College Accounting (Book Only): A Career Approach
Accounting
ISBN:9781337280570
Author:Scott, Cathy J.
Publisher:South-Western College Pub
Individual Income Taxes
Accounting
ISBN:9780357109731
Author:Hoffman
Publisher:CENGAGE LEARNING - CONSIGNMENT
Auditing: A Risk Based-Approach (MindTap Course L...
Accounting
ISBN:9781337619455
Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg
Publisher:Cengage Learning
Operating Loss Carryback and Carryforward; Author: SuperfastCPA;https://www.youtube.com/watch?v=XiYhgzSGDAk;License: Standard Youtube License