Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Pat Colt Is auditing the financlal statements of Manning Company. The following is a summary of the uncorrected misstatements that Colt has identified during the

Pat Colt Is auditing the financlal statements of Manning Company. The following is a summary of the uncorrected misstatements that
Colt has identified during the past three years. These misstatements are Immaterlal and have related to Isolated matters. In this
summary, parentheses imply that the misstatements would have reduced balances If they had been corrected (e.g., in 2020, the
misstatements would have reduced net Income by $82,500, assets by $100,000, Ilabilitles by $17,500, and equity by $82,500 if
corrected).
During the most recent audit, Colt concluded that expenses totaling $130,000 were recognized In January 2024(when MannIng pald
them) but should have been recognized in 2023.
Requlred:
a. What is the dollar Impact of the misstatement Identlfied In 2023 on each of the following (assume a 21% tax rate for Manning)?
Note: Enter amounts to be deducted with a minus sign.
b. Assume that performance materlality was set at $180,000. Would the misstatement be materlal if using the rollover method?
c. Assume that performance materlality was set at $180,000. Using the Iron Curtaln method, would the $130,000 misstatement in
2023 result In the need for an adjusting adjustment to the financlal statements?
d. If performance materlality were established at $100,000 for Manning, what is the total misstatement amount to consider when
evaluating materlality under each of the following methods:
e. If performance materlality were established at $100,000 for Manning, under each method, what is the minimum amount of
adjustment Colt would propose to MannIng's Company's financlal statements?
image text in transcribed

Step by Step Solution

There are 3 Steps involved in it

Step: 1

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

Cost Accounting Principles And Applications

Authors: Horace R. Brock

5th Edition

0070081522, 978-0070081529

More Books

Students also viewed these Accounting questions

Question

In the long term, what information should he provide for all film

Answered: 1 week ago

Question

b. Did you suppress any of your anger? Explain.

Answered: 1 week ago