Audit homework assignment

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Proli Footwear AJE Control - Inventory and Accounts Payable December 31, 2014 AJE Number Reference Accounts/Description x = account has impact on income before taxes impact on income before taxes amount = Account Number Debit DR/CR Credit Proli Footwear Costs and Selling Prices of Products December 31, 2014 Product Proli A Proli B Dapper Icetemp Leatherworker Litetech Mudhoppers Sportech Woodland V V V V V V V V V Cost Selling Price 91 72 141 72 66 52 36 64 73 125 105 235 108 85 70 45 80 115 V = vouched cost to cost records 20161106002920student_assignment_5.xls Proli Footwear Accounts Payable - Trade Confirmation Summary (selected responses) December 31, 2014 Vendor Brazilian Leather Works Conn Chemical Elfriede's Famous Fabrics Indio's Rubber Supply Mary's Supply House Midwest Leather Nebraska Leather Scuff GB Leather Standard Adhesives Vijay Vinyl Supply Balance Per Books Vendor Confirm Comments 191,240 74,038 389,801 213,849 Balance is $286,561 Balance is correct Balance is correct Balance is correct 0 Balance is $(15,298) 99,052 Balance is correct Balance is over 90 days 199,605 past due 126,935 Balance is correct 65,957 Balance is $65,957 Balance is over 60 days 107,503 past due oli Footwear s Payable - Trade mmary (selected responses) mber 31, 2014 Auditor Comments Goods included in physical inventory not recorded as payable; difference=$95,321 C-11 Proli paid same invoice twice; vendor balance is correct Partial payment made on 1/14/2015 for 25,000 A-7 It appears that prices charged by Scuff GB Leather are 25% higher than other leather vendors; RP investigating related party issue Partial payment made on 1/5/2015 for 85,900 A-7 Auditor Action Proli Footwear Determination of Sample Size for Substantive Tests of Accounts Payable Using a Formal Nonstatistical Sampling Plan December 31, 2014 Number of Vendors Tolerable misstatement for each account balance: Testing threshold: West & Fair, CPAs, LLC uses 1/3 of tolerable misstatement Accounts Payable Balance: Accounts exceeding threshold: Unusual items Untested amount Additional accounts tested (rounded) f) Total accounts tested It has been determined that a low level of reliance can be placed on other audit procedures for accounts payable - this results in a high other procedures risk targeted detection risk is 4% II-6 RP Additional sample size determination = Untested Amount/Testing Threshold * Other Procedures Risk Factor Untested Amount a) ÷ Testing Threshold b) * Other Procedures Risk Factor-per table below d) Additional accounts tested (rounded) West & Fair, CPAs, LLC uses the following table to determine the other procedures risk factor: Targeted Detection Risk for Accounts Payable/Purchases Cycle Other Procedures Risk Factor From Schedule II-6 High 3.0 d) Very High Below 9% High 10 - 30% 2.7 Moderate 31 - 80% 2.3 Low Above 81% 2.0 AUDITOR CONCLUSION: NOTE TO STUDENTS: If you believe that the number of items tested is inadequate, state the minimum additional amount to be tested in your conclusion. You should assume that RP will do the additional testing. unts Payable Amount b a) ures for accounts payable - this s Risk Factor c )=a) * b) e)= c) * d) f) er procedures risk factor: Moderate 2.3 2.0 1.6 1.2 Low 2.0 1.6 1.2 1.0 e, state the minimum additional ditional testing. Proli Footwear Summary of Accounts Payable - Trade December 31, 2014 Vendor Aukland Leather Brazilian Leather Works BZ Leather Carlisle Chemicals Conn Chemical Co Elfriede's Famous Fabrics Formal Fabrics Dryer Industries, Inc. Indio's Rubber Supply Kalispell Leather Kyoto Leather Lincoln Leather Mary's Supply House Marie's Supplies Midwest Leather Nebraska Leather Scuff GB Leather Standard Adhesive Thailand National Rubber Co. Thelma's Threads Veritech Adhesives Vijay Vinyl Supply Other 19 confirmed accounts Other 285 accounts not confirmed Totals - 326 accounts C C C C C C C C C C C C C C C C C C C C C C C A A A A A A A A A A Accounts Payable Balance 99,509 191,240 122,778 90,994 74,038 389,801 92,455 186,430 213,849 352,493 405,789 135,399 0 104,978 99,052 199,605 126,935 65,957 58,458 99,638 42,842 107,503 184,949 371,208 3,815,900 C = Confirmation sent to vendor. A = Balance over testing threshold 20161106002920student_assignment_5.xls 20161106002920student_assignment_5.xls ade Purchases During Year 2,557,822 1,790,000 7,875,547 719,446 1,546,849 2,594,627 520,214 9,487,600 6,281,408 1,195,994 7,628,757 5,532,207 2,187,491 3,476,843 2,510,019 4,134,781 3,812,851 C-16 4,989,718 3,229,329 3,065,312 2,834,819 3,394,178 6,537,372 22,033,888 109,937,072 20161106002920student_assignment_5.xls Proli Footwear Purchase Cut-Off Analysis December 31, 2014 Receiving Report Date Receiving Report # Received from Raw Materials Accounts Inventory Payable #1310 #2300 C-2 1158 v 12/28/14 Scuff GB Leather 36,665 36,665 C-2 1159 v 12/28/14 Brazilian Leather Works 95,321 95,321 C-2 1160 C-2 1161 v v 12/29/14 Footwear Warehouse 12/29/14 Formal Fabrics 27,860 27,860 C-2 1162 v 12/29/14 Kyoto Leather 80,431 80,431 1163 v 1/4/15 Vinyl Magic 59,399 59,399 1164 v 1/4/15 Rubber Wholesalers 63,692 63,692 1165 v 1/4/15 Adhesives Inc. 89,894 89,894 1166 v 1/6/15 Kalispell Leather 59,419 59,419 1167 v 1/6/15 Vinyl Magic 57,177 57,177 1168 v 1/6/15 Indio's Rubber Supply 36,083 36,083 1169 v 1/8/15 Thelma's Threads 48,028 48,028 1170 v 1/8/15 Veritech Adhesives 56,350 56,350 79,599 79,599 1171 v 1/8/15 Conn Chemical Co. V = vouched to vendor invoice and receiving report. RP Other 22,581 oli Footwear e Cut-Off Analysis mber 31, 2014 Purchase Journal Date Comments 12/29/14 Shipped FOB shipping point on 12/20/2014; counted in inventory; included in Acc Pay 01/06/15 Shipped FOB destination on 12/7/14; counted in inventory; purchase recorded after 12/31/2013 C-14 N/A 12/30/14 Customer overstock; returned to finished goods warehouse on 12/29/2014; included in physical inventory count counted in inventory 12/30/14 Shipped FOB shipping point on 12/5/14; counted in inventory 01/05/15 Shipped FOB destination on 1/2/15 01/05/15 Shipped FOB shipping point on 12/31/14 01/06/15 Shipped FOB destination on 1/2/15 01/06/15 Shipped FOB destination on 1/2/15 01/07/15 Shipped FOB destination on 1/2/15 01/07/15 Shipped FOB destination on 1/4/15 01/09/15 Shipped FOB destination on 1/2/15 01/09/15 Shipped FOB destination on 1/4/15 01/09/15 Shipped FOB destination on 1/7/15 Auditor Action Proli Footwear Inventory Test Counts - Proli, CT Location December 31, 2014 Tag # 124 109 127 112 103 115 118 106 Item Description Litetech Icetemp Dapper Woodland Dapper Proli A Proli A Sportech Count 9,845 15,237 9,399 8,312 7,052 23,229 24,396 11,839 Proli Footwear Inventory Test Counts - Waterbury, CT Location December 31, 2014 Tag # 203 206 Item Description Icetemp Mudhoppers Count 14,494 23,599 Proli Footwear Inventory Test Counts - Walton, FL Location December 31, 2014 Tag # 303 307 311 Item Description Litetech Leatherworker Leatherworker Count 17,963 9,688 11,962 Proli Footwear Raw Materials by Vendor - All Locations December 31, 2014 Vinyl Vijay Vinyl Supply Formal Fabrics Total Vinyl Rubber Dryer Industries Indio's Rubber Supply Thailand National Rubber Total Rubber Leather Cowhide Aukland Leather Brazilian Leather Works Kalispell Leather Lincoln Leather Scuff GB Leather Total Cowhide Ostrich African Leather Producer Pigskin Elfriede's Famous Fabrics Total Leather Chemicals Carlisle Chemicals Conn Chemical Co Total Chemicals Thread Mary's Supply House Thelma's Threads Total Thread Adhesives Standard Adhesive Veritech Adhesives Total Adhesives Total Raw Materials 789,229 246,573 1,035,802 677,921 99,562 258,717 1,036,200 277,697 239,615 293,965 324,130 376,393 C-16 1,511,800 131,750 1,168,303 2,811,853 405,240 537,570 942,810 190,700 46,101 236,801 322,527 164,111 486,638 Proli Footwear Physical Inventory Tag Control December 31, 2014 Tag # Item Description Proli, CT Location: 101 Dapper 102 Dapper 103 Dapper 104 Dapper 105 Dapper 106 Sportech 107 Sportech 108 Icetemp 109 Icetemp 110 Woodland 111 Void 112 Woodland 113 Woodland 114 Litetech 115 Proli A 116 Proli A 117 Void 118 Proli A 119 Proli B 120 Proli B 121 Sportech 122 Proli B 123 Proli A 124 Litetech 125 Void 126 Proli A 127 Dapper 128 Woodland Count (units) V V V V 3,610 6,009 7,052 4,065 6,074 11,839 5,961 9,197 15,237 10,036 -----8,312 7,950 21,896 23,229 21,064 -----24,396 22,884 26,279 1,674 18,965 9,875 9,845 -----10,165 9,399 11,632 Proli Footwear Physical Inventory Tag Control December 31, 2014 Tag # Item Description Waterbury, CT Location: 201 Icetemp 202 Icetemp 203 Icetemp 204 Void 205 Mudhoppers 206 Mudhoppers 207 Mudhoppers Walton, FL Location: 301 Sportech 302 Sportech 303 Litetech 304 Leatherworker 305 Leatherworker 306 Void 307 Leatherworker 308 Leatherworker 309 Void 310 Sportech 311 Leatherworker 312 Litetech Count (units) V V V V 6,537 12,368 14,494 -----18,839 23,599 11,987 4,989 4,849 17,963 17,315 9,525 -----9,688 11,301 -----7,893 11,962 25,911 V = Vouched number of units and inventory description to physical inventory count tag. RP 20161106002920student_assignment_5.xls Proli Footwear Count Sheet Summary - Inventory December 31, 2014 Finished Goods Summary - All Locations Item Proli A Proli B Dapper Icetemp Leatherworker Litetech Mudhoppers Sportech Woodland Totals Vinyl Rubber Leather Cowhide Ostrich Pigskin Chemicals Thread Adhesives Units sv 68,128 36,209 57,833 57,991 75,615 54,425 37,205 37,930 425,336 Unit Cost 91 72 141 72 66 52 36 64 73 Total #VALUE! 4,905,216 5,105,469 4,163,976 3,827,406 3,931,980 1,959,300 2,381,120 2,768,890 37,117,696 Raw Materials Summary - All Locations 1,035,802 1,036,200 1,511,800 131,750 1,168,303 2,811,853 942,810 236,801 486,638 Totals 6,550,104 Total inventory before audit adjustments Audit adjustments: 43,667,800 Balance per audit 20161106002920student_assignment_5.xls Proli Footwear Lead Schedule - Inventory and Accounts Payable December 31, 2014 Account Number Account Title 1310 Raw Materials Balance per T/B Debit Credit - - - - Adjustments - - - Debit Credit 6,550,104 1315 Work in Process 0 1320 Finished Goods 37,117,696 Total Inventory 2300 Accounts Payable - Trade 6000 Cost of Goods Sold 3,815,900 108,711,900 Impact of AJEs for this assignment on net income before income taxes = DR/CR Balance per Audit Debit oli Footwear ventory and Accounts Payable ember 31, 2014 Balance per Audit Credit

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