LUKE'S GENERAL STORE Long-Term Debt December 31, 20X7 Item# 1 Current Portion of Long Term Debt 2 Note Payable (non-current portion) Total Long-Term Debt List of Auditing Procedures: Agree beginning balance to previous year's audit workpapers. Use Drop-down in cells below $ 48,250 Select Procedure A 180,351 $ 228,601 Select Procedures B Foot/cross-foot to ensure mathematical accuracy. 12/31/X6 Balance Additions Principal Payments 12/31/X7 Balance C Agree to confirmation sent to lender. Note Payable 3 $ 273,450 (44,849) $ 228,601 Select Procedure(s) D Agree to General Ledger balances. (5.15% annual rate, 60 mos) E Compare to amortization schedule principal payments to verify correct. 4 Client Interest Expense for year ended 12/31/X7 $ 12,700 Select Procedure(s) F G Perform analytical procedure, interest is deemed reasonable based on outcome of procedure. Agree ending balance to amortization schedule. Instructions: H Performed analytical procedure, interest is NOT deemed reasonable based on outcome of procedure. Items 1 through 4 represent the items that an auditor ordinarily would find on a client-prepared debt analysis. The accompanying "List of auditing procedures" represents substantive auditing procedures. For each item above, select one or more procedures, as indicated, that the auditor most likely would perform to gather evidence in support of that item. The procedures on the list may be selected once, more than once, or not at all. Use the drop-down list in column G to select the procedure(s). For the Interest Expense, complete the analytical procedure on the right. 1) Show your calculation for the estimated interest expense amount 2) Show your calculation for the acceptable range (use +/-5%) 3) Compare the client's amount to the acceptable range and select Yes (within the range) or No (not within the range) 4) Determine if the client's interest expense is reasonable and select Yes or No LUKE'S GENERAL STORE Interest Expense Analytical Procedure $ 273,450 228,601 251,026 Client's beginning balance of note payable Client's ending balance of note payable Average balance 1) Calculate auditors estimated interest expense: 2) Calculate auditors estimated acceptable range: 3) Compare to client's interest expense of: Is the client's interest expense within the acceptable estimated range? 4) Is the client's interest expense considered reasonable and adequate? $ 12,700 Select Answer Select Answer