Equality Coffee Roasters Limited Trial Balance as of December 31, 20x2 DEBITS CREDIT Cash 248,726 Accounts receivable 946,241 Allowance for bad debts 61,444 Inventory, nished goods 4,670,992 Inventory, work-inprocess 606,086 Inventory, raw materials 1,668,580 Patents, at cost 84,547 Provision for inventory obsolescence 98,311 Property, plant, and equipment (PPE) 23,842,581 Accumulated amortization, PPE 9,585,303 Accounts payable 1,961,300 Income taxes payable 46,206 Warranty provision 73,733 Longterm bonds payable, due 20x4 4,915,540 Share capital, common shares 245,777 Retained earnings, beginning of year 11,838,430 Revenue 21,658,361 Cost of goods sold 11,469,184 General and administration expenses 3,687,884 Other expenses 2,209,535 Management bonuses 500,000 Income tax expense 550,049 Totals 50,484,406 50,484,405 L'ase 3 0 DC 8-6 Comprehensive Audit Planning Case. You have been assigned to the audit of the nancial statements of Equality Coffee Roasters Limited (ECR) for its year ending December 31, 20x2. The company started ve years ago and is in the business of obtaining coffee beans from around the world under a fair trade policy, roasting the beans locally, and selling them to coffee shops in Ontario. Most of their sales are in the urban centres of the province. ECR's business involves obtaining raw coffee beans from coffee-producing countries around the world. ECR's business model is to only purchase coffee from certied fair trading plantations where the agricultural workers receive a fair wage and share of prots. Investors in ECR's shares are primarily ethical investors and mutual funds that concentrate on investing in companies that have high corporate social responsibility ratings. In the preliminary audit planning done to date, your audit manager has determined that inventory is the account with the highest risk of material misstatement. Last year, the audit team uncovered an error in the ending inventory balance in the amount of a $65,000 overstatement. You have been assigned to continue the ECR audit planning work by nalizing and documenting various risk assessment and planning decisions so the audit team can move on to developing the detailed audit plans. It is now January 20x3, and you are at the ECR ofces to begin your audit work. In discussion with the company's management, you have learned that ECR currently has about 10% of the coffee bean market in Ontario. Its coffee is considered to be a premium product because of its ethical sources but also because it purchases only the highest quality of Arabica beans and uses a special justintime roasting and delivery business process that puts the very best quality product into the stores at the peak of its avour. About 75% of its sales are to independent neighbourhood coffee shops in urban areas. ECR also sells to one major coffee shop chain and supplies an upmarket grocery store chain. Fair trade coffees can sell for 2025% more than coffee from other sources and have enjoyed increasing popularity over the past few years. Exhibit DC 8-6 shows the December 31, 20x2, adjusted trial balance listing that you have obtained from ECR management