AUDITING+ASSURANCE SERVICES (LL)
AUDITING+ASSURANCE SERVICES (LL)
11th Edition
ISBN: 9781266448119
Author: MESSIER
Publisher: MCG
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Chapter 5, Problem 5.38P

A

To determine

Introduction: Expectation statement is a calculation made by the auditor based on the information provided by the management.

To calculate: An expectation for the reserve for returns account.

B

To determine

Introduction: Tolerable difference refers to the difference between amount stated in the statements and auditor’s expectation that would not affect the decision making of the auditor.

To find: The tolerable difference.

C

To determine

Introduction: Tolerable difference refers to the difference between amount stated in the statements and auditor’s expectation that would not affect the decision making of the auditor.

To compare:The expectation to the book value and check if it is greater than the tolerable difference.

D

To determine

Introduction: Tolerable difference refers to the difference between amount stated in the statements and auditor’s expectation that would not affect the decision making of the auditor.

To explain: The steps to be followed by the auditor if the difference between the book value and the expectation is greater than the tolerable difference.

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It is now January 1. You plan to make a total of 5 deposits of $500 each, one every 6 months, with the first payment being made today. The bank pays a nominal interest rate of 14% but uses semiannual compounding. You plan to leave the money in the bank for 10 years. Round your answers to the nearest cent. 1. How much will be in your account after 10 years? 2. You must make a payment of $1,280.02 in 10 years. To get the money for this payment, you will make five equal deposits, beginning today and for the following 4 quarters, in a bank that pays a nominal interest rate of 14% with quarterly compounding. How large must each of the five payments be?
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