compute an independent estimation of the accrued product warranty liability as of December 31, 2012. since this figure will be an estimate, a audit document to indicate exactly how the estimation was derived. Also, indicate whether or not the $45,465 figure reported for accrued product warranty is reasonable.

SUMMARY OF PRODUCT WARRANTY EXPENSE (Prepared by Client) SUMMARY O January 2011 through December 2012 January February March April May June July August September October November December January February March April May June 2011 2011 2011 2011 2011 2011 2011 2011 2011 2011 2011 2011 2012 2012 2012 2012 2012 2012 Sales for Month 1,064,000 632,000 718,000 958,000 972,000 828,000 742,000 920,000 884,000 1,066,000 1,172,000 1,600,000 1,221,000 762,000 692,000 1,114,000 1,180,000 818,000 Returns During Month: From Current Month Sales 386 274 354 144 294 122 512 20 584 938 1,010 646 672 468 670 342 736 - 1 Month Old Sales 890 1,066 776 658 738 1,028 552 526 994 1,118 1,166 1,126 1,896 1,938 732 702 1,340 1,472 - 2 Month Old Sales 1,198 1,386 1,674 638 962 960 1,250 858 1,138 924 1,258 1,332 1,314 1,770 1,722 794 820 1,532 - 3 Month Old Sales 1,110 846 2,574 1,750 1,324 1,316 1,182 882 1,594 1,082 1,278 1,328 1,834 1,690 2,148 1,830 1,160 1,054 - 4 Month Old Sales 1,140 1,316 1,972 2,376 686 640 912 1,404 2,058 1,470 1,024 1,208 1,188 1,250 1,596 2,402 2,046 1,098 - 5 Month Old Sales 656 578 1,526 2,042 1.584 1,142 410 456 1.624 1,396 980 912 1.350 1.398 1,000 1,314 2,020 1,616 - 6 Month Old Sales 646 570 506 970 122 890 914 502 404 1,034 440 544 398 782 280 1,166 1,408 1,390 Total Returns During Month 6.026 6.036 9,382 8.878 6.010 6.098 5,732 5.296 8,232 Z,608 Z084 1460 8,626 9,500 1946 8,878 9,636 8,898 Audit Objectives: Scope: Audit Procedures: Comments: Audit Conclusion:Exhibit 12-1 (Cont.) Lakeside Company SUMMARY OF PRODUCT WARRANTY EXPENSE (Prepared by Client) January 2011 through December 2012 May June July August September 2012 October 2012 November 2012 December 2012 2012 2012 2012 2012 1, 180,000 818,000 844,000 1,100,000 1,022,000 1,205,000 1,284,000 1,748,000 842 736 1,198 502 554 1,340 1,472 440 846 884 674 1,008 1,504 820 1,532 1,476 1,368 1,538 1,032 1,570 1,160 750 1,054 2,406 2, 108 1,660 1,894 1,868 1,328 2,046 1,098 1,498 584 1,704 1,436 1,752 2,020 1,788 1,616 1,254 1,038 1,648 936 1,204 1, 150 1,408 1,390 1,998 970 1, 106 610 1,048 1,288 1,340 1, 158 1,032 2,636 8.898 8,150 Z,084 8,362 10,412 2660 9.482