I need help with this audit Proli footwear.

Thank you.

Proli Footwear AJE Control - Property, Plant, and Equipment December 31, 2014 AJE Number Reference Accounts/Description x= account has impact on income before taxes impact on income before taxes amount = Account Number Debit DR/CR Credit Proli Footwear Analysis of Long-Lived Asset Disposals and Related Gains/Losses December 31, 2014 Description of Item Cost Accumulated Depreciation Book Value Cash Received * Balance per trial balance Audit adjustments: Sale of 1 type E machine Manufacturing Equipment Note: purchased in 1996-15 year lif 103,330 103,330 0 12,000 Sale of 2 type BB equipment Warehouse Equipment Note: purchased in 2001-15 year lif 794,960 688,961 105,999 1,000 Balance per audit 898,290 792,291 *Miscellaneous income (account #8500) was credited for the cash received. Note: Prepare one AJE for each item sold. RP RP osses ceived. Gain/ (Loss) 0 RP Proli Footwear Repairs and Maintenance Analysis December 31, 2014 Date Amount 01/31/12 02/28/12 03/31/12 04/30/12 05/31/12 06/30/12 07/31/12 08/31/12 09/30/12 10/31/12 11/30/12 12/31/12 31,250 31,250 89,950 39,250 257,960 158,700 109,880 65,400 31,250 48,970 31,604 35,000 Balance per trial balance Audit adjustments: 930,464 Balance per audit Analysis of entries: Janitorial service: ($8,250/month) See note Trash removal service: (23,000/month) See note Paint president's office Purchase and install new X machine on production line Repairs to roof Repair rain damaged offices Plumbing repairs Computer repairs Misc: none over $500 Total Note: This represents only 11 months expense. 90,750 253,000 8,000 453,000 8,000 35,800 11,200 17,014 53,700 930,464 RP Proli Footwear Determination of Sample Size for Substantive Tests of Property, Plant and Equipment Using a Formal Nonstatistical Sampling Plan December 31, 2014 Number of Items Amount Tolerable misstatement for each account balance: Testing threshold: West & Fair, CPAs, LLC uses 1/3 of tolerable misstatement a) 217 Long-Lived Assets Balance: b) Less: Items exceeding threshold: Less: Unusual items: Additions involving interest capitalization Additions that do not seem appropriate for business Untested items Additional items tested Total items tested c) It has been determined that a moderate level of reliance can be placed on other audit procedures for long-lived assets - this results in a moderate other procedures risktargeted detection risk is 60% II-6 RP Additional sample size determination = Untested Items/Testing Threshold * Other Procedures Risk Factor Untested items E) Testing Threshold d) * Other Procedures Risk Factor-per table below f) Additional items to be tested: c) West & Fair, CPAs, LLC uses the following table to determine the other procedures risk factor: Targeted Detection Risk for Long-Lived Assets Other Procedures Risk Factor From Schedule II-5 High Moderate Low Very High Below 9% 3.0 2.3 2.0 High 10 - 30% 2.7 2.0 1.6 1.6 f) Moderate 31 - 80% 2.3 1.2 Low Above 81% 2.0 1.2 1.0 Above Threshold Additional Testing Long-Lived Asset Class Items Cost Items Land 4 items 4 1,879,000 0 Buildings 4 items 4 3,464,840 0 Leased Buildings 4 items 4 3,489,988 0 Manufacturing Equipment 15 items 14 ### 4 Warehouse Equipment 15 items 15 ### 0 Office Equipment 165 items 6 1,883,900 33 Total items 217 items a) b) AUDITOR CONCLUSION: NOTE TO STUDENTS: If you believe that the number of items tested is inadequate, state the minimum additional amount to be tested in your conclusion. You should assume that RP will do the additional testing Equipment d) E) d on other audit cedures risk- ctor edures risk factor: Factor Additional Testing Cost 448,960 465,740 g) the minimum additional testing Proli Footwear Lease Information December 31, 2014 Location Proli, Ct Lease ID Principal Uses L1 Principal sales, marketing and executive offices Guaranteed Residual Lease term Years Value 2001-2031 30 150,000 Proli, Ct L2A Main warehouse and distribution facility 2006-2016 10 100,000 Proli, Ct L2B Main warehouse and distribution facility year-to-year n/a 0 Walton, FL L3 Warehouse and distribution facility 2001-2016 15 100,000 Waterbury, CT L4 Warehouse and distribution facility 2001-2015 14 150,000 Waterbury, CT L5 Manufacturing, warehousing and offices for Mudhoppers, Inc. 2012-2017 5 75,000 M = Traced authorization to lease facilities to the Board of Directors' minutes Note: At the inception of the lease, the Company had no intention of retaining ownership (1) Cost represents the present value of the minimum lease payments at the inception of NOTE TO STUDENTS: The classification of the leases as capital or operating is tested in Assignment 7 (EB-2 thro assignment presume that the client's classification is correct. Cost (1) per books Type of lease per books M Capital 943,406 M Capital 1,042,810 N/A M Operating N/A M Operating 1,064,826 M Capital 438,946 M Capital etaining ownership at the end of the lease. RP at the inception of the lease. RP Assignment 7 (EB-2 through EB-7). In this Proli Footwear Depreciation Schedule December 31, 2014 Description Buildings: PER BOOKS Proli, CT building Walton, FL building Walton, FL building Proli, CT building Totals (a) M M M M Buildings: PER AUDITORS Proli, CT building Walton, FL building Walton, FL building Proli, CT building Totals (b) Method Used Year Acquired SL 35 years SL 35 years SL 35 years SL 35 years 1996 2001 2011 2014 SL 35 years SL 35 years SL 35 years SL 35 years 1996 2001 2011 2014 Cost DA-7 DA-7 DA-7 DA-7 DA-1 Accumulated Depreciation 2012 1,087,650 631,900 460,290 1,285,000 3,464,840 f Correction needed = (b)-(a) Expense 2013 Expense 2014 Accumulated Depreciation 2014 543,825 31,076 574,901 225,678 18,054 243,732 32,878 13,151 46,029 1,256,053 1,413,932 2,669,985 2,058,434 1,476,213 3,534,647 f DA-1 f DA-1 f cf cf cf cf cf 512,749 31,076 543,825 31,076 574,901 207,624 18,054 225,678 18,054 243,732 19,727 13,151 32,878 13,151 46,029 0 0 0 18,357 18,357 740,100 62,281 802,381 80,638 883,019 f f f f f 0 (1,256,053) (1,256,053) (1,395,575) (2,651,628) cf cf cf cf cf 512,749 207,624 19,727 0 740,100 f 1,087,650 631,900 460,290 1,285,000 3,464,840 f 0 DA-2 Accumulated Depreciation 2013 31,076 18,054 13,151 1,256,053 1,318,334 f M = Traced purchase authorization to the Board of Directors' minutes Note: Per DA-7 salvage value is 0 Proli Footwear Depreciation Schedule December 31, 2014 Method Used Description Year Acquired Leased Buildings: PER BOOKS (1) Lease L1 M SL 30 years Lease L2A M SL 10 years Lease L4 M SL 14 years Lease L5 M SL 5 years Totals Leased Buildings: PER AUDITORS (1) Lease L1 SL 30 years Lease L2A SL 10 years Lease L4 SL 14 years Lease L5 SL 5 years Cost Accumulated Depreciation 2012 Expense 2013 52,141 94,341 76,059 43,895 266,436 651,757 707,555 950,738 87,790 2,397,840 Expense 2014 52,141 94,341 76,059 87,789 310,330 Accumulated Depreciation 2014 2001 2006 2001 2012 1,042,810 943,406 1,064,826 438,946 3,489,988 2001 2006 2001 2012 1,042,810 943,406 1,064,826 438,946 342,244 548,214 751,464 36,395 29,760 84,341 65,345 72,789 372,004 632,555 816,809 109,184 29,760 84,341 65,345 72,789 401,764 716,896 882,154 181,973 3,489,988 1,678,317 252,235 1,930,552 252,235 2,182,787 Totals 599,616 613,214 874,679 43,895 2,131,404 DA-3 Accumulated Depreciation 2013 703,898 801,896 1,026,797 175,579 2,708,170 Correction needed = a) - b) (1) Classification of leased property and verification of lease terms has not been performed. This work will be done in the liabilities section.RP NOTE: Salvage value can be found on DA-7 M = Traced authorization to lease facilities to the Board of Directors' minutes Proli Footwear Depreciation Schedule December 31, 2014 Method Used Description Year Acquired Cost Manufacturing Equipment: PER BOOKS Various M DDB 15 years Various M DDB 15 years Various M DDB 15 years Various M DDB 15 years Totals 1996 2001 2013 2014 6,254,980 5,703,420 2,792,000 242,300 14,992,700 Manufacturing Equipment: PER AUDITORS Various DDB 15 years Various DDB 15 years Various DDB 15 years Various DDB 15 years Totals 1996 2001 2013 2014 6,254,980 5,703,420 2,792,000 242,300 14,992,700 Accumulated Depreciation 2012 6,096,524 2,147,380 2,510,237 602,600 11,356,741 DA-4 Expense 2013 31,691 711,208 0 0 742,899 Accumulated Depreciation 2013 6,128,215 2,858,588 2,510,237 602,600 12,099,640 Expense 2014 25,353 568,966 0 0 594,319 Accumulated Depreciation 2014 6,153,568 3,427,554 2,510,237 602,600 12,693,959 Correction needed = a) - b) Note: Per DA-7 salvage value is 0 M = Traced purchase authorization to the Board of Directors' minute Proli Footwear Depreciation Schedule December 31, 2014 Method Used Year Acquired SL 15 years SL 15 years SL 15 years SL 15 years SL 15 years 2001 2005 2010 2013 2014 Warehouse Equipment: PER AUDITORS Various SL 15 years Various SL 15 years Various SL 15 years Various SL 15 years Various SL 15 years Totals 2001 2005 2010 2013 2014 Description Warehouse Equipment: PER BOOKS Various M Various M Various M Various M Various M Totals Cost DA-7 DA-7 DA-7 DA-7 DA-7 DA-1 Accumulated Depreciation 2012 DA-5 Expense 2013 1,983,450 1,545,000 7,181,600 585,350 2,500,000 13,795,400 f 1,520,645 763,958 1,196,933 0 0 3,481,536 f 132,230 103,000 478,773 0 0 714,003 f 1,983,450 1,545,000 7,181,600 585,350 2,500,000 13,795,400 f 1,520,645 772,500 1,196,933 0 0 3,490,078 f 132,230 103,000 478,773 19,512 0 733,515 f Accumulated Depreciation 2013 Expense 2014 Accumulated Depreciation 2014 1,652,875 132,230 1,785,105 866,958 103,000 969,958 1,675,706 478,773 2,154,479 0 0 0 0 0 0 4,195,539 714,003 4,909,542 f DA-1 f DA-1 f 1,652,875 875,500 1,675,706 19,512 0 4,223,593 f 132,230 103,000 478,773 39,023 83,333 836,359 f 1,785,105 978,500 2,154,479 58,535 83,333 5,059,952 f cf cf cf cf cf cf cf cf cf cf cf cf Correction needed = a) - b) Note: Per DA-7 salvage value is 0 M = Traced purchase authorization to the Board of Directors' minute Proli Footwear Depreciation Schedule December 31, 2014 Method Used Year Acquired M M M M M SL 10 years SL 10 years SL 10 years SL 10 years SL 10 years 2004 2005 2006 2008 2011 Office Equipment: PER AUDITORS Various Various Various Various Various Totals SL 10 years SL 10 years SL 10 years SL 10 years SL 10 years 2004 2005 2006 2008 2011 Description Office Equipment: PER BOOKS Various Various Various Various Various Totals Cost DA-7 DA-7 DA-7 DA-7 DA-7 DA-1 Accumulated Depreciation 2012 DA-6 Expense 2013 450,000 329,850 1,387,500 894,300 478,150 3,539,800 f 292,500 181,418 624,375 223,575 0 1,321,868 f 45,000 32,985 138,750 89,430 0 306,165 f 450,000 329,850 1,387,500 894,300 478,150 3,539,800 f 292,500 181,418 624,375 223,575 0 1,321,868 f 45,000 32,985 138,750 89,430 23,908 330,073 f Accumulated Depreciation 2013 Expense 2014 337,500 45,000 382,500 214,403 32,985 247,388 763,125 138,750 901,875 313,005 89,430 402,435 0 0 0 1,628,033 306,165 1,934,198 f DA-1 f DA-1 f 337,500 214,403 763,125 313,005 23,908 1,651,941 f 45,000 32,985 138,750 89,430 47,815 353,980 f Correction needed = a) - b) Note: Per DA-7 salvage value is 0 Accumulated Depreciation 2014 M = Traced purchase authorization to the Board of Directors' minute 382,500 247,388 901,875 402,435 71,723 2,005,921 f cf cf cf cf cf cf cf cf cf cf cf Proli Footwear Lead Schedule - Long-Lived Assets - Property, Plant, and Equipment December 31, 2014 Account Number Account Title Balance per T/B Debit Credit 1511 Land 1,879,000 1512 Buildings 3,464,840 1513 Leased Buildings 3,489,988 1521 Manufacturing Equipment 14,992,700 1522 Warehouse Equipment 13,795,400 1523 Office Equipment - - - - Adjustments - - - Debit Credit 1/2 Balance per Audit Debit Credit 3,539,800 Total Property, Plant, and Equipment Accumulated Depreciation: 1531 Buildings 3,534,647 1532 Leased Buildings 2,708,170 1533 Manufacturing Equipment 1534 Warehouse Equipment 4,909,542 1535 Office Equipment 1,934,198 12,693,959 Proli Footwear Lead Schedule - Long-Lived Assets - Property, Plant, and Equipment December 31, 2014 Account Number Account Title Balance per T/B Debit Credit - - - - Adjustments - - - Debit Credit Depreciation Expense: 7201 Buildings 1,476,213 7202 Leased Buildings 310,330 7203 Manufacturing Equipment 594,320 7204 Warehouse Equipment 714,003 7205 Office Equipment 306,165 Related Accounts: 7380 Repairs and Maintenance 8100 Gain/Loss on Sale of Plant Assets 930,464 0 Impact of AJEs for this assignment on client's net income before income taxes = DR/CR 2/2 Balance per Audit Debit Credit