please answer asap thank you

Caseware Assignment 1. Calculate preliminary materiality based on the working trial balance; Assume Paddy has been in business for 15 years and this is a repeat audit forus for the past 5 years. Calculate an appropriate material level giving explanation for your conclusion. SHOW YOUR CALCULATIONS 2. Do preliminary analytical review based on working trial balance and determine any potential problem areas: a. % changes (horizontal analysis) from last year for all accounts b. Ratio analysis for both years: current ratio, debt-equity ratio, inventory turnover, AR turnover For the inventory turnover and AR turnover, use "average AR" and "average 3. Record Adjusting Entries in Caseware a. Inventory costing $22,800 was shipped at year end on Consignment and the client incorrectly excluded the inventory from their inventory account balance at yearend. b. While auditing, a machine equal to $30,000 was incorrectly expensed to Salaries Expense. The useful life of this asset is 5 years - the company uses straight line amortization on machinery. c. In performing cut-off testing at yearend, we discovered a shipment of inventory costing $15,000 that was shipped FOB destination. The customer received the goods in January. The client recorded the sale at Dec 31. Sales price charged to the customer was $19,500. d. While auditing the Accounts Receivable section and testing the valuation assertion, it was discovered that based on historical data the Bad Debts expenseshould be calculated based on the following percentages: 3% of 0-30 days, 5% of 31-60 days and 7% of 61-90 days. The ending Allowance for doubtful accounts needs to be adjusted to reflect these percentages. PADDY CORPORATION PADDY CORPORATIO WORKING CLIENT TRIAL BALANCE FINAL CLIENT TRIAL BAL DECEMBER 31, 2020 DECEMBER 31, 2015 CODE ACCOUNTS DEBIT CREDIT DEBIT CREDIT 1001 CASH $ 6,868 $ 8,566 1010 SHORT TERM INVESTMENTS 10,300 10,000 1020 ACCOUNTS RECEIVABLE 425,955 385,250 1025 ALLOWANCE FOR DOUBTFUL ACCOUNTS 13,500 11,200 1030 INVENTORY 502,812 390,000 1040 NOTES RECEIVABLE 10,000 1100 OFFICE BUILDING 500,000 500,000 1105 ACCUMULATED DEPRECIATION (OFFICE BUILDING) 280,000 260,000 2001 ACCOUNTS PAYABLE 313,757 285,333 2010 BANK LOAN, long term 60,000 40,000 3001 PREFERRED STOCK, 30,000 OUTSTANDING ON DECEMBI 100,000 I 100,000 3010 COMMON STOCK, 100,000 ISSUED and OUTSTANDING ON 200,000 200,000 3020 RETAINED EARNINGS 280,623 243,673 4000 SALES 2,443,948 2,258,000 4010 SALES DISCOUNTS 10,571 9,235 4020 SALES RETURNS 51,259 23,555 5001 COST OF GOODS SOLD 1,730,440 1,640,200 5010 SHIPPING EXPENSE 12,000 12,000 5020 BAD DEBTS EXPENSE 13,000 11,500 5030 SALARIES EXPENSE 286,599 280,000 5040 RENT EXPENSE 40,955 40,100 5050 INSURANCE EXPENSE 16,456 16,200 5060 SUPPLIES EXPENSE 15,173 15,000 5070 ADVERTISING EXPENSE 20,860 19,400 5080 DEPRECIATION EXPENSE 20,000 20,000 5090 TELEPHONE EXPENSE 18,580 17.200 TOTALS $ 3,691,828 $ 3,691,828 $ 3,398,206 $ 3,398,206 NOTE: All revenue, expense, gain and loss figures above are before tax. PADDY CORPORATION BANK RECONCILIATION 2020-12-31 Balance per Bank Statement at Dec 31, 20 $7,234 Add: outstanding deposit 200 Less: outstanding cheques cheque 123 $ 265 cheque 125 299 $566 Balance per bank adjusted at December 3 $ 6,868 Balance per general ledger, unadjusted $ 7,110 Year end Adjustments: NSF Cheque (customer Nikki Doe invoice 320 Bank fees 5 E-transfer from customer Jane Smythe Inv 83 Balance per general ledger, adjusted at De $ 6,868 less less add MENNA BANK OF ONTARIO 123456 Ontario Street Hamilton, Ontario L8H 635 PADDY CORPORATION BANK STATEMENT Balance at December 1, 2020 $6,920 Deposits 2300 E-transfer 83 cheques: 2018-12-10 #110 -1000 2018-12-15 #111 -198 2018-12-22 #118 -205 2018-12-28 #120 -341 Returned cheque NSF -320 Bank fees -5 Balance at December 31, 2020 $7,234 PADDY CORPORATION 1234 Yonge Street Hamilton, Ontario L3M 5D2 Confirmation letter to: MENNA BANK OF ONTARIO The Menna Bank of Ontario confirms the following balances are correct for Paddy Corporation at the date December 31, 2020 1 Bank Baliaccount # $ 7.234 2 Investme investme $ 10.295 3 Bank Loaloan #73 $ 60.000 Signature: Rose Joy 61-90 days PADDY CORPORATION AGING ACCOUNTS RECEIVABLE 2020-12-31 Customer Total 0-30 days 31-60 days ABC Com: $ 35,800 $ 10,500 $ 25,300 John Corp 32,400 32,400 Natalie Mc 64,450 42,200 Gregory C 47,000 35,000 ZYX Corp 62,825 42,050 Alana Con 78,090 5,590 Manna Co 43,590 Sophie Inc 61,800 51,800 5,000 TOTALS $ 425,955 $ 136,900 $ 152,940 22,250 12,000 20,775 32,500 43,590 5,000 136. 115 AR Confirmation letters: #1 ABC COMPANY 2135 W. Lane Ave. Hamilton, Ontario 143511 Re: Balance at December 31, 2020 $35800 To whom it may concern: As of December 31, 2020, our records indicate your balance with our company as the amount listed above. Please complete and sign the bottom portion of this letter and return the entire letter to our auditors, JS LLP, PO Box 100, Hamilton ONT L6J 8K2 A stamped, self-addressed envelope is enclosed for your convenience. Sincerely, PADDY CORPORATION $35,800 The above balance is Correct incorrect (show amount) It incorrect, please provide information that could help to reconcile your account. 0 Response: We paid the entire amount on January 2.2021 Signature : Nicolas Clause Tide Controller Your note to file: found cash recorded as received in the cash receipts journal on January 3, 2021 #2 Natalie Musique Corporation 5660 Ocean Blvd Burlington, Ontario L5R BH3 Re: Balance at December 31, 2017 $64.450 To whom it may concern As of December 31, 2017, our records indicate your balance with our company as the amount listed above. Please complete and sign the bottom portion of this letter and return the entire fetter to our auditors, the bottom the bot JS LLP PO Box 100, Hamilton ONT LJ 8K2 A stamped, self-addressed anvelope is enclosed for your convenience. Sincerely, PADDY CORPORATION incorrect, please provide information that could help to reconcile your account Response: Per our records the following invoices are outstanding invoice $4212 involo14215 Notewe paid invoice 215 on January 10, 2018 and invoice 36212 on February 10, 2018 50200 522250 $54450 Sonature Amanda Hope Your note to file found cash recorded ved The VP Finance De February 20 2018 Caseware Assignment 1. Calculate preliminary materiality based on the working trial balance; Assume Paddy has been in business for 15 years and this is a repeat audit forus for the past 5 years. Calculate an appropriate material level giving explanation for your conclusion. SHOW YOUR CALCULATIONS 2. Do preliminary analytical review based on working trial balance and determine any potential problem areas: a. % changes (horizontal analysis) from last year for all accounts b. Ratio analysis for both years: current ratio, debt-equity ratio, inventory turnover, AR turnover For the inventory turnover and AR turnover, use "average AR" and "average 3. Record Adjusting Entries in Caseware a. Inventory costing $22,800 was shipped at year end on Consignment and the client incorrectly excluded the inventory from their inventory account balance at yearend. b. While auditing, a machine equal to $30,000 was incorrectly expensed to Salaries Expense. The useful life of this asset is 5 years - the company uses straight line amortization on machinery. c. In performing cut-off testing at yearend, we discovered a shipment of inventory costing $15,000 that was shipped FOB destination. The customer received the goods in January. The client recorded the sale at Dec 31. Sales price charged to the customer was $19,500. d. While auditing the Accounts Receivable section and testing the valuation assertion, it was discovered that based on historical data the Bad Debts expenseshould be calculated based on the following percentages: 3% of 0-30 days, 5% of 31-60 days and 7% of 61-90 days. The ending Allowance for doubtful accounts needs to be adjusted to reflect these percentages. PADDY CORPORATION PADDY CORPORATIO WORKING CLIENT TRIAL BALANCE FINAL CLIENT TRIAL BAL DECEMBER 31, 2020 DECEMBER 31, 2015 CODE ACCOUNTS DEBIT CREDIT DEBIT CREDIT 1001 CASH $ 6,868 $ 8,566 1010 SHORT TERM INVESTMENTS 10,300 10,000 1020 ACCOUNTS RECEIVABLE 425,955 385,250 1025 ALLOWANCE FOR DOUBTFUL ACCOUNTS 13,500 11,200 1030 INVENTORY 502,812 390,000 1040 NOTES RECEIVABLE 10,000 1100 OFFICE BUILDING 500,000 500,000 1105 ACCUMULATED DEPRECIATION (OFFICE BUILDING) 280,000 260,000 2001 ACCOUNTS PAYABLE 313,757 285,333 2010 BANK LOAN, long term 60,000 40,000 3001 PREFERRED STOCK, 30,000 OUTSTANDING ON DECEMBI 100,000 I 100,000 3010 COMMON STOCK, 100,000 ISSUED and OUTSTANDING ON 200,000 200,000 3020 RETAINED EARNINGS 280,623 243,673 4000 SALES 2,443,948 2,258,000 4010 SALES DISCOUNTS 10,571 9,235 4020 SALES RETURNS 51,259 23,555 5001 COST OF GOODS SOLD 1,730,440 1,640,200 5010 SHIPPING EXPENSE 12,000 12,000 5020 BAD DEBTS EXPENSE 13,000 11,500 5030 SALARIES EXPENSE 286,599 280,000 5040 RENT EXPENSE 40,955 40,100 5050 INSURANCE EXPENSE 16,456 16,200 5060 SUPPLIES EXPENSE 15,173 15,000 5070 ADVERTISING EXPENSE 20,860 19,400 5080 DEPRECIATION EXPENSE 20,000 20,000 5090 TELEPHONE EXPENSE 18,580 17.200 TOTALS $ 3,691,828 $ 3,691,828 $ 3,398,206 $ 3,398,206 NOTE: All revenue, expense, gain and loss figures above are before tax. PADDY CORPORATION BANK RECONCILIATION 2020-12-31 Balance per Bank Statement at Dec 31, 20 $7,234 Add: outstanding deposit 200 Less: outstanding cheques cheque 123 $ 265 cheque 125 299 $566 Balance per bank adjusted at December 3 $ 6,868 Balance per general ledger, unadjusted $ 7,110 Year end Adjustments: NSF Cheque (customer Nikki Doe invoice 320 Bank fees 5 E-transfer from customer Jane Smythe Inv 83 Balance per general ledger, adjusted at De $ 6,868 less less add MENNA BANK OF ONTARIO 123456 Ontario Street Hamilton, Ontario L8H 635 PADDY CORPORATION BANK STATEMENT Balance at December 1, 2020 $6,920 Deposits 2300 E-transfer 83 cheques: 2018-12-10 #110 -1000 2018-12-15 #111 -198 2018-12-22 #118 -205 2018-12-28 #120 -341 Returned cheque NSF -320 Bank fees -5 Balance at December 31, 2020 $7,234 PADDY CORPORATION 1234 Yonge Street Hamilton, Ontario L3M 5D2 Confirmation letter to: MENNA BANK OF ONTARIO The Menna Bank of Ontario confirms the following balances are correct for Paddy Corporation at the date December 31, 2020 1 Bank Baliaccount # $ 7.234 2 Investme investme $ 10.295 3 Bank Loaloan #73 $ 60.000 Signature: Rose Joy 61-90 days PADDY CORPORATION AGING ACCOUNTS RECEIVABLE 2020-12-31 Customer Total 0-30 days 31-60 days ABC Com: $ 35,800 $ 10,500 $ 25,300 John Corp 32,400 32,400 Natalie Mc 64,450 42,200 Gregory C 47,000 35,000 ZYX Corp 62,825 42,050 Alana Con 78,090 5,590 Manna Co 43,590 Sophie Inc 61,800 51,800 5,000 TOTALS $ 425,955 $ 136,900 $ 152,940 22,250 12,000 20,775 32,500 43,590 5,000 136. 115 AR Confirmation letters: #1 ABC COMPANY 2135 W. Lane Ave. Hamilton, Ontario 143511 Re: Balance at December 31, 2020 $35800 To whom it may concern: As of December 31, 2020, our records indicate your balance with our company as the amount listed above. Please complete and sign the bottom portion of this letter and return the entire letter to our auditors, JS LLP, PO Box 100, Hamilton ONT L6J 8K2 A stamped, self-addressed envelope is enclosed for your convenience. Sincerely, PADDY CORPORATION $35,800 The above balance is Correct incorrect (show amount) It incorrect, please provide information that could help to reconcile your account. 0 Response: We paid the entire amount on January 2.2021 Signature : Nicolas Clause Tide Controller Your note to file: found cash recorded as received in the cash receipts journal on January 3, 2021 #2 Natalie Musique Corporation 5660 Ocean Blvd Burlington, Ontario L5R BH3 Re: Balance at December 31, 2017 $64.450 To whom it may concern As of December 31, 2017, our records indicate your balance with our company as the amount listed above. Please complete and sign the bottom portion of this letter and return the entire fetter to our auditors, the bottom the bot JS LLP PO Box 100, Hamilton ONT LJ 8K2 A stamped, self-addressed anvelope is enclosed for your convenience. Sincerely, PADDY CORPORATION incorrect, please provide information that could help to reconcile your account Response: Per our records the following invoices are outstanding invoice $4212 involo14215 Notewe paid invoice 215 on January 10, 2018 and invoice 36212 on February 10, 2018 50200 522250 $54450 Sonature Amanda Hope Your note to file found cash recorded ved The VP Finance De February 20 2018