Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Prepaids You now need to audit prepaids, but dont spend too much time on them. There just isnt a lot of risk in this area.

Prepaids You now need to audit prepaids, but dont spend too much time on them. There just isnt a lot of risk in this area. Because the amounts are not significant, let the Crumpler do most of the legwork (vouching invoices, examining cancelled checks, examining titles, etc.) for you on prepaids and fixed assets. On second thought, insurance expense looks really low compared to last years better check it out. Other Assets Since I know that your hands have been full, I tried to help out with other assets. With the information below, I think you can complete the Investments and other assets sections (I-1): 1. By luck, Shock-Proof Socks is one of our firms clients. I checked with Dave Masterson, the audit manager, about how the company is doing. He said that after reporting no income for several years, they struck gold in 2017, reporting total income of $3,130,610.03. The company has yet to pay out any dividends though. 2. When I had lunch with Eric Unum, we discussed Apollos recent purchase of Synergizer Battery stock. He indicated that Larry eventually wanted to purchase controlling stock in the company when Apollo started moving production in-house. While in his office, I examined the brokers confirmation, the cancelled check (# 3582), and examined the stock certificate for 20,000 shares in Apollos name. The price of the stock was unchanged as of December 31 from its purchase price of $16.13. Personally, I would be surprised if Apollo will ever be able to purchase even 5% of Synergizers stock. 3. You may want to think about the Phoneshoe patent, since the company has decided to discontinue research and development efforts on it. 4. Investment income is composed of the equity earnings in Shock-Proof Socks and a transfer from the Controllers Clearing Account for $330,375.80. The clearing account is a temporary account Apollo uses for out of balance items and transactions they cant identify. If there is a balance at the end of the year, they either recognize miscellaneous income or expense to clear it out. The amount is the same amount as the December 26 purchase of the investment in Synergizer. You should investigate this further. 5. Do some analytic procedures on interest income to make sure that it is reasonable with respect to the interest rate on the bank confirmation and compared to last year.

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_2

Step: 3

blur-text-image_3

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

The Auditory Culture Reader

Authors: Michael Bull, Les Back

2nd Edition

1472569024, 978-1472569028

More Books

Students also viewed these Accounting questions

Question

The company has fair promotion/advancement policies.

Answered: 1 week ago