Jacob, CPA, of Great CPA is auditing the Year 6 financial statements for PB Copiers Company, an issuer. PB Copiers Company currently offers three models of its copy machine: Model A, for personal use ($400); Model B, for small businesses ($1,000); and Model C, for large businesses ($3,000). Jacob has set performance materiality at $20,000. Management has provided Jacob with the following list of related parties:

	Aaron Wolf
	Barbara Chen
	Chris Johnson
	Copier Rentals
	Debbie Anderson
	Rental Business MachinesLos Angeles
	Jenna Gerstner
	Juan Garcia
	Sarah Noodle

Based on the list of related parties provided by management and evidence provided in the exhibits:

	Identify the individuals/entities with whom PB Copiers Company has engaged in a related party transaction in Year 6. A name may only be used once or not at all.
	Analyze the potential impact of the related party transaction on the risk of material misstatement by selecting whether it increases, decreases, or has no effect on risk of material misstatement.

	A	B
1	Identified Related Party Transactions	Effect on the Risk of Material Misstatement
2
3
4
5
6

Jacob, CPA, of Great CPA is auditing the Year 6 financial statements for PB Copiers Company, an issuer. PB Copiers Company currently offers three models of its copy machine: Model A, for personal use ($400); Model B, for small businesses ($1,000); and Model C, for large businesses ($3,000). Jacob has set performance materiality at $20,000. Management has provided Jacob with the following list of related parties:

	Aaron Wolf
	Barbara Chen
	Chris Johnson
	Copier Rentals
	Debbie Anderson
	Rental Business MachinesLos Angeles
	Jenna Gerstner
	Juan Garcia
	Sarah Noodle

Based on the list of related parties provided by management and evidence provided in the exhibits:

	Identify the individuals/entities with whom PB Copiers Company has engaged in a related party transaction in Year 6. A name may only be used once or not at all.
	Analyze the potential impact of the related party transaction on the risk of material misstatement by selecting whether it increases, decreases, or has no effect on risk of material misstatement.

	A	B
1	Identified Related Party Transactions	Effect on the Risk of Material Misstatement
2
3
4
5

E-mail From CFO

From:	snoodle@PBcopiers.com
Sent:	January 10, Year 7, 2:15 p.m.
To:	Jacob@GreatCPA.com
Subject:	RE: Sales Near Year-End

Hi Jacob: This e-mail is in response to your question regarding the sales transactions with related parties. We provide all our employees a 10 percent discount on the purchase of copy machines. We usually sell about 50 copiers a day. On December 31, Year 6, we sold 300 copiers to Don Nichols. We were very excited about this bulk saleit helped us beat and exceed our annual goal. Please let me know if you need any additional information. Thank you, Sarah Noodle CFO

Analysis of Sales

Minutes From Special Meeting PB Copiers Company Minutes of special meeting of June 25, Year 6

Members present:	Aaron Wolf
	Barbara Chen
	Chris Johnson
	Debbie Anderson
	Juan Garcia
Not present:	N/A
Agenda item:	Conversion of debt to equity and purchase of office building

This special meeting of the Board of Directors has been called to discuss conversion of debt to equity and purchase of an office building. PB Copiers has an outstanding loan balance with Jenna Gerstner for $80,000. She has agreed to convert this entire debt to equity in PB Copiers valued at $100,000. Management has located an office building that meets the current needs of our growing business. The office building is owned by Sarah Noodle. She is willing to sell the building for $300,000 (fair market value of the building is $300,000). Action: Conversion of debt to equity approved to Jenna Gerstner as designated above. Purchase of office building for $300,000 approved with an escrow close date of August 15, Year 6.