EP 14-7 Required: Long-Term Note. LO3 You were engaged to examine the financial statements of Ronlyn Corporation for the year ended June 30. On May 1, the corporation borrowed $500,000 from the bank to finance plant expansion. The long-term note agreement provided for the annual payment of principal and interest over five years. The existing plant was pledged as security for the loan. Due to unexpected difficulties in acquiring the building site, the plant expansion had not begun as planned. To make use of the borrowed funds, on May 16, management invested the $500,000 in securities. a. What are the audit objectives for examining long-term debt? b. Prepare an audit program for the examination of the long-term note agreement between Ronlyn and the bank. ( 2000, American Institute for Certified Public Accountants, Inc. All Rights Reserved. Adapted by permission. AICPA Materials were selected solely by authors, and the AICPA is not responsible for the currency or reliability of materials chosen.)