Question
A further analysis shows that $10,000 of the total balance relates to a loan to one of the company's directors, which has been recorded as
A further analysis shows that $10,000 of the total balance relates to a loan to one of the company's directors, which has been recorded as a trade receivable on the balance sheet. The director has not made any payments on the loan in the past year, and there is doubt about the recoverability of the full amount.
Required:
a) Calculate the adjusted balances of trade receivables, allowance for doubtful debts, and the provision for the loan to the director, after considering the audit findings.
b) Discuss the implications of the audit findings on the financial statements and the potential impact on the stakeholders of the company.
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Fundamentals of Financial Accounting
Authors: Fred Phillips, Robert Libby, Patricia Libby
5th edition
78025915, 978-1259115400, 1259115402, 978-0078025914
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