Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

explain how to calcuate tolerable misstatement in this excel problem for the following highlighted in yellow color Account Name Cash and cash equivalents Receivables, net


explain how to calcuate tolerable misstatement in this excel problem for the following highlighted in yellow color

image

Account Name Cash and cash equivalents Receivables, net Inventory Prepaid expenses Deferred income tax benefits Property, Plant, & Equipment Accumulated depreciation and amortization Intangibles, net Lines of credit 2021 Planning Materiality (from work paper 3-7) Ratio of Total Tolerable Misstatement to Planning Materiality *** $48,978 $12,875 $122,337 $17,772 $7,132 $206,426 $85,986 $423 $11,011 $68,399 $28,270 Accounts payable & Reserve for returns Accrued liabilities & Accrued profit sharing Income taxes payable & Deferred income taxes Common stock, 26,121 shares issued Donated capital Additional paid-in capital Deferred compensation Accumulated other comprehensive income Retained earnings Treasury stock, 6,546 and 6,706 shares at cost, respectively Total Amount of Tolerable Misstatement Allocated To Balance Sheet Accounts $18,057 $261 $5,460 $20,740 ($79) $3,883 $317,907 ($143,950) EARTHWEAR CLOTHIERS Allocation of Materiality: Tolerable Misstatements December 31, 2022 (In thousands) 2022 Unaudited Trial Balance $79,359 $8,643 $147,693 $15,647 $10.338 $223,736 $97,722 $1,734 $10,510 $60,286 $33,600 $24,567 $261 $5,460 $25,719 ($36) $2,173 $361,402 ($134,512) Tolerable Misstatement $2,368 $2,368 $1,578 $1,578 $65 $1,365 $1,578 $0 $543 Not Applicable $1,578 $13,023 $3,157 4.1 Tolerable Misstatement as % of Account Balance ** Planning Materiality* 0% 0% 75% 0% 75% 50% 0% 0% 50% 0% 0% 0% 2% 0% 0% 2% 0% 23% 1% 0% 0% 15% 0% 0% 0% 25% 43% 25% 50% 6% 0% 0% 17% 25% Not Applicable Not Applicable 50% 1% Explanation Large and complex account with misstatements expected, costly to audit Relatively complex, estimation involved, related to Deferred Income Taxes Relatively little change from prior year, not difficult to audit Relatively little volume, not difficult to audit via 3rd party info No change from prior year, easily verified No change from prior year, easily verified Little change from prior year, not difficult to audit Not difficult to audit, examine current year vesting activity Involves some complex applications of GAAP Not Applicable Little change from prior year, not difficult to audit Init 1/

Step by Step Solution

3.44 Rating (147 Votes )

There are 3 Steps involved in it

Step: 1

To calculate the tolerable misstatement for the highlighted accounts in the provided information we ... blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Fundamental Accounting Principles

Authors: John Wild, Ken Shaw, Barbara Chiappett

23rd edition

1259536351, 978-1259536359

More Books

Students also viewed these Accounting questions

Question

"What is the structure of a C program, and how does it execute?"

Answered: 1 week ago

Question

Describe six danger signs of a bust-out artist.

Answered: 1 week ago

Question

Did the parties reach an agreement that both were satisfied with?

Answered: 1 week ago