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Calabro software Services. Jones's firm, Abbott & Johnson, LLP, has audited Calabre for 10 years. Students Handout 4 (continued) Question 5: Don Jones is

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Calabro software Services. Jones's firm, Abbott & Johnson, LLP, has audited Calabre for 10 years. Students Handout 4 (continued) Question 5: Don Jones is the senior is chare of the audit of Calabro's unaudited statements are shown here for the year ended December 31, 2019 communications technology to develop solutions for business and organizational problems. The company General Information: Calabro software Services is a business services company that uses wireless provides commercial software services in 12 major metropolitan areas in the southeastern part of the owns and operates some software systems: manufactures, leases, and sells software packages and United States. The company emphasizes its systems, reliability, solution-oriented marketing, and high level of customer service. The company provides high-quality, low-cost service to the marketplace. Calabro was founded 15 years ago, when Ronald Calabro purchased a local software company in Tampa, Florida. The company expanded by building software systems in major metropolitan areas. Calabro Paging Services went public 10 years ago, and its stock is traded on the NASDAQ stock exchange. Five years ago, the day-to-day operations of the company were turned over to the founder's son, Matthew Calabro, who has served as chief executive officer since that time. Ronald Calabro continues to serve as chairman of the board. As of 2019, the company has built and still operates 12 software systems, with the last system constructed in 2017. In recent years the company has focused on intemal growth rather than company improved its earnings during this period and used its excess cash provided by operations to geographic expansion, and its compound annual subscriber growth rate has been 20 percent. The reduce its debt burden to approximately $3.5 million at December 31, 2019. Company Operations: Calabro offers a variety of software packages to its subscribers. Subscribers may lease a software from the company or purchase it and pay only an access fee for the company virtual of the access fee and the purchase or lease of one or more software packages. The company's contracts system. Each subscriber enters into a service contract with the company, which provides for the payment with customers with large numbers of software packages are typically for three- to five-year terms, while contracts for smaller quantities are typically for one-year terms with annual renewal. The combined lease and access fee of $50.00 to per month, depending upon the type of module and optional features selected. The company charges monthly access fee for service to each customer-oned module. Volume discounts on access fees and lease costs are typically offered to large-unit-volume subscribers. Comparably to prior years approximately 2 percent of the company's software modules in service at December 31, 2019, were leased from the company and approximately 18 percent were owned by subscribers Required: a. Determine the preliminary judgment about materiality for Calabro Software Services using the worksheet included in the attached Exhibit b. Allocate the preliminary judgment about materiality to the balance sheet accounts using the relative size of the accounts as the basis for allocation. Assume that Jones has decided that long-term debt deferred income taxes common stock and paid in capital and treasury stock will be audited 100 percent. c. Reallocate the amounts allocated in part (b) based on the following informati 1. Controls over both the revenue and purchasing cycles are strong, 2. Inventory contains some items that may be outdated and includes cerut technology bugs; and 3. There were approximately $1 million of additions to property, plant, anopipment during 2019 Juvectory PPT ma u sp ive an cord: oom at night, an Ow segregation of cash register 1s: lock the file lock the warehe n with the amount m for p records room f physical ment: lock the roo ties; use of a safe dependent C k James, a highly oc given increased re en responsible for ac the firm and his duties

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