Date: Thu, 7 FEB 2008 16:35:38 +0000 From: "Bradley Crumpler" Subject: Search for Unrecorded Liabilities

Hey, chill out! I am just doing this gig while I wait to qualify for the PGA tour! Ok, so I went back over your review notes and this is what I did:

1. From the cutoff bank statement in the B-series workpapers, I got a list of all the checks that cleared by January 18.

2. I removed all checks written before 12/31, as they would not relate to December 31 outstanding liabilities anyway.

3. I then traced the remaining checks to the voucher packets. The information is posted in the attached workpaper (L-3).

4. Per your instructions, I also examined documents in the open purchase order file, the unmatched receiving report file, and the unmatched invoice file (something that I forgot to do in my initial search audit procedures). How am I supposed to know if Apollo owes any money or not? I am going back to the driving range. If you want to stay out of trouble with Darlene, I suggest youd better prepare the working paper and any necessary adjustments

Apollo Shoes, Inc. L-1 Schedule of Current Liabilities Prepared by For Year Ended 12/31/2007

Acct # Account Title 2006 2007

20000 Accounts Payable $4,633,118.09 $1,922,095.91

23100 Sales Tax Payable $0.00 $0.00

23200 Wages Payable $29,470.32 $0.00

23300 FICA Employee Withholding $1,318.69 $4,291.25

23350 Medicare Withholding $583.99 $11,414.99

23400 Federal Payroll Taxes Payable $6,033.01 $118,086.12

23500 FUTA Tax Payable $0.00 $0.00

23600 State Payroll Taxes Payable $2,815.47 $42,397.24

23700 SUTA Tax Payable $0.00 $0.00

23800 FICA Employer Withholding $1,318.69 $4,291.25

23900 Medicare Employer Withholding $583.99 $11,414.99

Apollo Shoes, Inc. L-2 Accounts Payable Schedule Prepared by For Year Ended 12/31/2007

List of Approved Vendors

Anglonesian Institute for Reprograming and Rehabilitation $0.00

B. Franklin's LP&E $0.00

Fleur de Lis Catering $6,868.12

Just Boxes $0.00

Lawyers "R" Us, LLC $1,902,224.45

Office Hacks Supplies $1,117.19

Sign Up! $4,994.99

Smart Chip $0.00

Squint Telephone and Cellular $6,891.16

Synergizer Battery Company $0.00

Tiger Jaguar Dealership $0.00

Zrocks $0.00

Total: $1,922,095.91

Apollo Shoes, Inc. L-3 Search for Unrecorded Liabilities Prepared by BC For Year Ended 12/31/2007

From Cutoff Bank Statement: From Check Register From Voucher Packet

Check Date Amount Date of Check Payee Invoice Date Description

3622 1/17/08 $6,683.93 1/13/2008 Smart Chip 12/27/2007 Annual computer

maintenance contract2008

3623 1/17/08 $2,937.13 1/13/2008 Tiger Jaguar Dealership 1/9/2008 Automobile maintenance

on 1/9/08

3624 1/18/08 $6,868.12 1/13/2008 Fleur de Lis Catering 12/31/2007 Catered Holiday party

3625 1/17/08 $124.81 1/13/2008 Office Hacks 1/13/2008 Office supplies purchased

1/7/08

3626 1/17/08 $15,216.88 1/13/2008B. Franklin's LP&E 1/10/2008 "For December electricity"

3627 1/17/08 $6,891.16 1/13/2008 Squint Cellular 1/5/2007 December telephone bill

3628 1/17/08 $6,025.43 1/13/2008 Sam Shaw N/A Car washes for fleet of

automobiles on 1/13.

3629 1/17/08 $927.09 1/13/2008 Just Boxes 1/7/2008 Packaging material

ordered 1/7/08.

3630 1/18/08 $8,419.69 1/13/2008 Synergizer Battery Company 1/3/2008 The goods were received on January 6 with bill of lading showing a January 3 shipping date and marked FOB, Shipping - Chicago.

3631 1/18/08 $8,434,889.09 1/13/2008 Anglonesia R&R Institute 12/26/2007 The receiving report was dated December 31. The accounts payable clerk indicated that the office party was held the afternoon of the 31st and the receiving report was probably not forwarded until the next working day so was not included in year-end accounts payable. This inventory was counted and included in the physical inventory at the end of the year.

3632 1/18/08 $1,117.19 1/13/2008 Office Hacks 12/31/2007 Business cards,

picked up 12/30/07

3633 1/17/08 $6,924.96 1/13/2008 Smart Chip 1/13/2008 Computer purchased 1/13/08

3634 1/18/08 $4,994.99 1/13/2008 Sign Up! 12/31/2007 New logos on vehicles on 12/31/07

3635 1/17/08 $5,174.00 1/13/2008Z rocks 1/13/2008 Copy machine purchased

1/13/08

3636 1/17/08 $585.28 1/13/2008 Smart Chip 1/13/2008 Computer supplies

picked up 1/13/08

Apollo Shoes, Inc. N-1 Notes Payable Schedule Prepared by For Year Ended 12/31/2007

Acct # Account Title Audited Balance 12/31/06 Additions Payments Unaudited Balance 12/31/2007

27000 Notes Payable-Noncurrent $0.00 2/2/06 $10,000,000.00 0 $10,000,000.00

24100 Line of Credit $10,000,000.00 6/30/07 $44,053,000.00 2/2/06; $10,000,000.00 $44,053,000.00

24200 Current Portion Long-Term Debt $0.00 $0.00 0 0

Total: $10,000,000.00 $54,053,000.00 $10,000,000.00 $54,053,000.00

Complete and document the work Bradley did

Perform search for unrecorded liabilities

Audit Long Term Liabilities

Audit Long Term Expense