During your first audit of the financial statement of the Luh Corporation, you find the following accounts and balances among the various other items in the trial balance.

Assuming that each of these three accounts is material in relation to the total assets of the company, select any two of them and state for each:

1. The audit procedures you would apply to each of them.

2. How would you present each of the two selected in 1 in the balance sheet to accompany your standard audit report. (Assume that you were able to satisfy yourself as to their carrying value.)

Transcribed Image Text:

1 Claim for refund-federal income taxes $124,000 2 Investment of stock in XYZ Company (5,000 shares of 100,000 shares issued 500,000 and outstanding, organized 5 years ago) 3 Treasury stock-at cost 110,000