structions Emails A-0 Planning Audit Program A-3 2019 10-K Date: 21 OCT 2020 00:42:35 +0000 From: "Darlene Wardlaw" Subject: Upcoming Apollo Shoes Engagement Well, first let me congratulate you on your recent promotion. Although we have not worked on an engagement together before, I have heard many good things about you. I look forward to working with you on the new Apollo Shoes engagement. Things have already gotten started so you'll see that I've done quite a bit of the work but I really need your help. I have the client acceptance form on my desk but I haven't put it in the binder yet. I understand that this is your first engagement to work as an in-charge. Arnold Anderson will be the engagement partner; he is pretty sharp so you'll have to stay on your toes. As engagement manager, I'll try to help out as much as I can. Understand, however, that I am managing four other busy season engagements, so my interaction time with you will be limited. Taylor Crump is the staff associate assigned to the audit. For now, I want you to familiarize yourself with Apollo Shoes. I asked Taylor to complete a materiality memo, but it may be useful for you to do it as well as a way to get familiar with Apollo. I have a few questions for you to answer, it may seem basic but I find its the best way to get your feet underneath you. I have included all necessary documents in the binder. Read over the 2019 10-K then please answer the following questions: 1) List three relevant facts about Apollo Shoes that you think might have an impact on the financial statement audit. 2) Define what is meant by a significant account or disclosure. 3) Identify at least two significant accounts or disclosures from the financial statements of Apollo Shoes. What makes each item significant? 4) Define what is meant by a relevant assertion. 5) Identify at least one relevant assertion for each of the significant accounts or disclosures previously identified from the financial statements of Apollo Shoes. What makes each assertion relevant? You can write up your thoughts and answers in an email, then send it to me (response form below). I have addressed a good portion of things on the planning program, I've highlighted in yellow anything I need you to address. Finally, since most of our interaction will be by e-mail, please forgive me if I give you too much detail. Since we haven't worked together before. I'd rather give you too much than too little until we get used to working together. DW Instructions Emails A-0 Planning Audit Program A-1 PBC 2019 Trial Balance Apollo Planning Audit Mini Case In this mini-case you will perform some procedures required as a part of audit planning. For ease your audit manager has already organized the workpapers and completed several of the required workpapers. Instructions: Read the email from your manager, then read the steps in the audit program found on Work Paper A-0 and familiarize yourself with the other planning section work papers. Complete all the steps on the audit program instructed by your manager. When you are finished with the items on the workpaper enter your initials in the box in the top right marked "Prepared By" This entire completed workbook should be renamed as PLAN2 Firstname Lastname and uploaded. Instructions Emails Apollo Shoes, Inc. AUDIT PLAN PLANNING FYE 12/31/2020 A-0 Planning Audit Program A-1 PBC 2019 Trial Balance A-0 You are responsible for completing all steps highlighted in green. 1 Complete client engagement acceptance form. Workpaper Reference TBA Related Assertion (s) Performed by DW Comments Review correspondence files, prior year audit workpapers, permanent files, financial statements and auditor's reports. NA DW 2 3 Obtain 2019 audited trial balance and 2020 unaudited trial balance. A-1 and A-2 DW 4 Obtain and review a copy of the prior year 10K. A-3 DW The PY 10K is included in the workpapers: at A-3, the PY workpapers are not available per Apollo. See board of director meeting minutes for more information A-3. Trial balance obtained on 01/01/2021 from Samual Carboy, Apollo Controller. Obtained by DW on 12/24/2020 a Foot balances and ensure mathematical accuracy of PBC trial balances b Trace prior period balances to the closing balance in the prior period's financial statements (10-K) 5 Determine the extent of involvement, if any, of consultants, specialists, or internal auditors. NA DW Some reliance on internal audit will be necessary. If the work of another is being used in the engagement, determine that it is used in accordance with professional standards. NA a 6 Review the minutes of the board of directors and committed meetings for the year and any new agreements, leases, contracts, or other important documents. Obtain copies of the minutes or agreements for the current or permanent workpaper files. Highlight matters relevant to the related audit area or for which disclosure will be required in the financial statement or notes. DW Apollo Director of Internal Audit - Karina Ramirez will be assisting on the audit, per my (DW) review of her qualifications and the organizational structure of Apollo I have concluded that she is both objective and competent. Notes on A-3. A-3 TC Obtain an engagement letter from the client. A-4 DW 7 8 Complete Materiality Memo A-5 Complete a time budget by audit area. A-6 DW 9 and expand time tracking Determine staffing assignments based on consideration of audit risks, and discuss the preliminary audit plan and key dates, i.e. inventory observation, mailing of confirmations, 10 etc. with the audit staff. Signed copy of engagement letter received from the client on November 20, 2020. Rough draft completed, new senior to track Staff determined as of 12/01/2020 A-7 DW Complete independence forms for all firm employees. NA NA 11 Electronically signed by all firm employees and filed on firm intranet as of December 31, 2020. A-2 2019 Trial Balance Apollo Shoes, Inc Trial Balance (Audited) 31-Dec-19 PBC Account ID Account Description Debit Credit Single Column format 10100 Cash on Hand 10200 Regular Checking Account $1,987.28 $198,116.52 10300 Payroll Checking Account 10400 Savings Account $0.00 $1.987 28 $198,116 52 $0.00 $3,044.958.13 $3,044,958.13 11000 Accounts Receivable $16,410,902.71 $16,410,902.71 11500 Allowance for Doubtful Accounts $1.262.819.88 ($1,282.819.88) 12000 Inventory-Spotlight $18,825,205.24 $18.825.205.24 12300 Reserve for Inventory Obsolescence $3,012.000.00 ($3,012,000.00) 14100 Prepaid Insurance $743.314.38 14200 Prepaid Rent 14300 Office Supplies 14400 Notes Receivable-Cument $200,000.00 $7.406.82 $743.314.38 $200,000.00 $7.406.82 $0.00 $0.00 $117,000.00 14700 Other Current Assets 15000 Land $117,000.00 15100 Buildings and Land Improvements $623,905.92 $623.905.92 15200 Machinery, Equipment, Office Fumiture $433,217.10 $433.217.10 17000 Accum. Depreciation $163,500.00 ($163,500.00) 19000 Investments 19900 Other Noncurrent Assets $572,691.08 $53,840.59 20000 Accounts Payable $4,633,118.09 23100 Sales Tax Payable 23200 Wages Payable $0.00 $29,470.32 $572,691.08 $53.840.59 ($4.633118.09) $0.00 ($29.470.32) 23300 FICA Employee Withholding 23350 Medicare Withholding 23400 Federal Payroll Taxes Payable 23500 FUTA Tax Payable 23600 State Payroll Taxes Payable $1,318.69 ($1,318.69) $583.99 ($583.99) $6,033.01 ($6,033.01) $0.00 $2.815.47 ($2.81547) 23700 SUTA Tax Payable 23800 FICA Employer Withholding $0.00 $1,318.69 ($1,318.69) 23900 Medicare Employer Withholding 24100 Line of Credit 24200 Current Portion Long-Term Debt 24700 Other Current Liabilities 27000 Notes Payable-Noncurrent 39003 Common Stock 39004 Paid-in Capital 39005 Retained Eamings 40000 Sales $583.99 $10.000.000.00 ($583.99) ($10.000.000.00) $0.00 $0.00 $0.00 $8,105,000.00 ($8.105,000.00) $7.423.000.00 ($7.423,000.00) $2,219,620.65 ($2.219.620.65) $246,172,918.44 ($246.172.918.44) 41000 Sales Returns $4,497,583.20 42000 Warranty Expense $1,100,281.48 45000 Income from Investments 46000 Interest Income $204,302.81 50010 Cost of Goods Sold $141.569.221.61 57500 Freight $4,302,951.46 60000 Advertising Expense 61000 Auto Expenses $897.140.01 $208,974.39 62000 Research and Development $31,212,334.17 64000 Depreciation Expense $133,000.00 64500 Warehouse Salaries $4,633,383.82 65000 Property Tax Expense $80.495.32 66000 Legal and Professional Expense $3,605,133.96 67000 Bad Debt Expense $1.622.425.99 68000 Insurance Expense $853,942.65 70000 Maintenance Expense 70100 Utities 70110 Phone 70120 Postal 71000 Miscellaneous Office Expense $61.136.04 $135,642.99 $76,373.78 $128,033.21 $17,023.27 $4.497.583.20 $1,100,281.48 $0.00 ($204,302.81) $141,569,221.61 $4,302.951.46 $897,140.01 $208.974.39 $31,212,334.17 $133,000.00 $4.633.383.82 $80.495.32 $3,605,133.96 $1.622.425.99 $853.942.65 $135.642.99 $76,373.78 $128,033.21 $0.00 $61,136.04 72000 Payroll Tax Exp $1,550,989.06 73000 Pension/Profit-Sharing Plan Ex $3,000,000.00 74000 Rent or Lease Expense $2.603,485.87 77500 Administrative Wages Expense $16,875,305.98 $17,023.27 $1,550.989.06 $3,000,000.00 $2.603,485.87 $16,875.305.98 78000 Interest Expense 78500 Income Tax Expense-Federal 78510 Income Tax Expense - State 80000 Loss on Legal Settement $875,000.00 $2,365,000.00 $429,000.00 $19,172,000.00 $875,000.00 $2.365,000.00 $429,000.00 $19,172,000.00 Apollo Shoes, Inc Preclosing Trial Balance 31-Dec-20 Account Description Account ID 10100 Cash on Hand 10200 Regular Checking Account PBC A-2 Debit Am Credit Am $2.275.21 5557.125.92 Single Column form $2.275.23 $557,125.92 10300 Payroll Checking Account 50.00 10400 Savings Account $3,645,599.15 $3,645,599.15 11000 Accounts Receivable $51515259.98 $51,515.25998 11400 Other Receivables $1,250,000.00 $1,250,000.00 11500 Allowance for Doubtful Accounts $1,239,009.75 151.23900975) 12000 Imemory $67,724.527.50 $67,724,527.50 12300 Reserve for Inventory Obsolescence $546,000.00 14100 Prepaid Insurance $3,424,213.7K 14200 Prepaid Rent 14300 Office Supplies 14400 Notes Receivable-Current 14700 Other Cument Assets 15000 Land 58.540.00 (5846,000 00) $3,424,213.78 50.00 58,540.00 50.00 50.00 $117,000.00 15100 Buildings and Land Improvements 15200 Machinery, Equipment, Office Furnite$2.929,097.13 17000 Accum. Depreciation 19000 Investments 19900 Other Noncurrent Assets 20000 Accounts Payable 23100 Sales Tax Payable 23200 Wages Payable $117,000.00 5674 383.92 5674,313.92 $2,929,097.13 $610,000.00 $1,998,780.39 10,000 $1,998,780.39 $53,840.59 $1,922,095.91 $53,840.59 (51.9225.91) 50.00 50.00 23300 FICA Employee Withholding $8,439.65 (43965) 23350 Medicare Withholding 511,414.99 1511.414.99) 23400 Federal Payroll Taxes Payable $118,086 12 ($118,086.12) 23500 FUTA Tax Payable 50.00 23600 State Payroll Taxes Payable $55,106.86 (555.106.86) 23700 SUTA Tax Payable 50.00 23800 FICA Employer Withholding $8,439.65 (843965) 23900 Medicare Employer Withholding $11,41499 ($1,414.99) 24100 Line of Credit $44,403,000.00 (544,401,000.00) 24200 Current Portion Long-Term Dete 50.00 24700 Other Current Liabilities 50.00 27000 Notes Payable-Noncurrent $12,000,000.00 ($12,000,000.00) 39003 Common Stock 39004 Paid-in Capital 39005 Retained Earnings $5,105,000.00 (5,105,000.00) $7,423,000.00 (57,423,000.00)] 56,590,483.64 (56,590,483.64) 40000 Sales 41000 Sales Returns 42000 Warranty Expense $242,713,452 8 5242.713452) $11.100.220.9 $1.158.12K 47 45000 Income from Investments $1,426,089.31 46000 Interest Income 47000 Miscellaneous Income 50010 Cost of Goods Sold $130,196,645.26 57500 Freight 60000 Advertising Expense $1,036.854.0 61000 Auto Expens 62000 Research and Development $528,870.44 64000 Depreciation Expense 64500 Warehouse Salaries 65000 Property Tax Expense 66000 Legal and Professional Expense 67000 Bad Debe Expense 68000 Insurance Expense 70000 Maintenance Expense 70100 Utilitie 70110 Phone $4,240,263.09 $210.502.0 $446,000.00 $4,720,715.56 $99 332.45 $4,913,224.45 $36,106.92 $35.500.87 $137,332.18 $52.59902 $131,181.46 $2,166,000.00 $11.100,220.89 $1,158,328.47 ($1,426,08931) 131,881 46) 152,166,000 00) $130,196,645.26 $4,240,263.09 $1,036,854.01 $210,502.80 $528,87044 $446,000.00 54,720,715.56 $99.332.45 $4,913,224.45 50.00 $36.106.92 $35,502.87 5137332.18 $52.59902 70120 Postal $770361 $77,803.61 71000 Miscellaneous Office Expense $24,891 82 $24.891.82 72000 Payroll Tax Exp $1,577,811 85 $1,577,185 73000 Pension/Profn-Sharing Plan Ex $3,630,375.0 $3,630,375.0 78600 Conmollen Cleaning Account $330,375.0 $330,375.00 74000 Rent or Lease Expense 51.206.574.00 $1,206,574.00 77500 Administrative Wages Expense 78000 Interest Expense $16,197,225.43 $16,197,225.43 $2,591,736.50 $2,591,736.50 78500 Income Tax Expense Federal 78510 Income Tax Expense State $330,119,291.01 $330,119,291.01 SK,000,00000 $8,900,000.00 $3,100,000.00 $3,100,000.00 CONSOLIDATED STATEMENTS OF INCOME APOLLO SHOES, INC. in thousands (except per share data) For the year ended, December 31, 2019 2018 Net Sales (Note 2) $240,575 $236,299 Cost of Sales $141,569 $120,880 Gross Profit $99,006 $115,419 Selling, General and Administrative Expenses $71,998 $61,949 Interest Expense (Note 7) $875 0 Litigation Expense (Note 10) ($19,172) 0 Other Expense (Income) ($204) ($1,210) Earnings from Continuing Operations Before Taxes $7,165 $54,680 Income Tax Expense (Note 9) $2,794 $21,634 Earnings from Continuing Operations $4,371 $33,046 Discontinued Operations, Net of tax benefit ($31,301) Net Income $4.371 $1.745 Earnings Per Common Share From Continuing Operations Other Net Income Weighted shares of common stock outstanding $0.54 $4.08 ($0.00) ($3.86) $0.54 $0.22 8,105 8.105 The accompanying notes are an integral part of the consolidated financial statements. CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION APOLLO SHOES, INC. in thousands Assets As of December 31 2019 2018 Cash $3,245 $3,509 Accounts Receivable (Net of Allowances of $1,263 and 210, 15,148 2,738 respectively) (Note 3) Inventory (Note 4) 15,813 13,823 Prepaid Expenses 951 352 Current Assets $35,157 $20,422 Property, Plant, and Equipment (Note 5) 1,174 300 Less Accumulated Depreciation Investments (Note 6) Other Assets (Note 6) Total Assets (164) (31) $1,010 $269 573 613 54 0 $36.794 $21.304 Liabilities and Shareholders' Equity Accounts Payable and Accrued Expenses $4,675 $3,556 Short-Term Liabilities (Note 7) 10,000 0 Current Liabilities $14,675 3,556 Long-Term Debt (Note 7) 0 Total Liabilities $14,675 3.556 Common Stock 8,105 8,105 Additional Paid-in Capital 7,423 7,743 Retained Eamings 6,591 1,900 Total Shareholders' Equity $22,119 $17,748 Total Liabilities and Shareholders' Equity $36.794 $21.304 The accompanying notes are an integral part of the consolidated financial statements. vii CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY APOLLO SHOES, INC. in thousands Shares Par Value ($1 per share) Additional Paid- Retained Other Total in Capital Earnings Balance, December 31, 2018 2,873 $2,873 $2,122 $475 $5,470 Net Income $1,745 $1,745 Exercise of Stock Options Other 232 $232 $301 $533 5,000 $5,000 $5,000 $10,000 Balance, December 31, 2018 8,105 $8,105 $7,423 $2,220 $0 $17,748 Net Income $4,371 $4,371 Exercise of Stock Options Other 0 $0 SO Balance, December 31, 2019 8,105 $8,105 $7,423 $6,591 $22,119 The accompanying notes are an integral part of the consolidated financial statements. CONSOLIDATED STATEMENTS OF CASH FLOWS APOLLO SHOES, INC. in thousands Cash Flows from Operating Activities Net Income Adjustments to Reconcile Net Income to Net Cash Provided Depreciation and Amortization Changes in Operating Assets and Liabilities Decrease (Increase) in Current Assets Accounts Receivable Inventory For the year ended December 31, 2019 2018 $4.371 $1.745 $133 $26 ($12,410) ($2,073) ($1,990) ($11,861) ($599) ($123) Prepaid Expenses Increase (Decrease) in Current Liabilities Accounts Payable and Accrued Expenses $1,119 $5.504 Total Adjustments ($13,747) ($8,527) Net Cash Provided by Operating Activities ($9.376) ($6.782) Cash Flows from Investing Activities Capital Expenditures Purchase of Other Assets Net Cash Provided by Investing Activities (8834) ($255) ($54) ($888) ($255) Cash Flows from Financing Activities Proceeds from the Issuance of Debt $10,000 Proceeds from the Issuance of Common Stock $10.533 Net Cash Provided by Financing Activities $10,000 $10.533 Net Increase (Decrease) in Cash ($264) $3,496 Cash at Begiming of Year Cash at End of Year The accompanying notes are an integral part of the consolidated financial statements. $3.509 $13 $3.245 $3.509 ns Emails A-0 Planning Audit Program A-1 PBC 2019 Trial Balance A-2 PBC 2020 Trial Balance Apollo Shoes, Inc 2019 10-K and assorted documents 31-Dec-20 This WP includes several documents considered critical to the audit planning process. Apollo 2017 10-K 2010 The following items could be noted by the student to be of significance to the audit: Apollo CEO Letter to CEO Later le ad of Dischem and And millec Munting Mim A DOD M Charl Information Relevant to 2020 Audit Audit Action Recommended January 06, 2020 Larry Lancaster, Chairman, President, and CEO is a new here.- Investigate Larry's background! Sales expected to increase 10% Note for analytic review of expens COGS and exp. to remain constant-Note for analytic review of expenses Authorized purchase of $1.3 million in equipment Vouch to supporting documentation, trace to PP&E workpapers. ST credit refinanced, rolled into LT N/P Note for liabilities work; ensure proper accounting and disclosure Officers' salary increase 10% Note for payroll analytic procedures Cost of Superbowl ad rose 10% ($1 million).- Note for review of expenses June 30, 2020 Damages from "Nee' caster cost $50,000.- Should be treated as repair, rather than capital addition Company raised prices 10% to meet expectations Examine reasons for not meeting goals Stopped R&D on Phoneshoe - Implications for intangible assets? Postage and telephone expense saved through e-mails-Note for analytic procedures involving expenses Write-off A/R for $23.810.13.-Was that the only write-off? Advanced $1.25 million to Larry Lancaster's secretary (personal)- Related party transaction should be disclosed in footnotes. 1% interest Authorized $1 million for purchase of computer systems. Verify purchase. Authorized $44,400,000 draw on LOC.-Verity the accounting for the liability January 6, 20211 Anderson, Olds, and Watershed hired (fee $750,000)X-1-Fee should be included in Professional Expenses Approved cash dividend ($860,000) (disbursed 03/01/21 for SH of recoed 12/31/20) Dividend should be accrued Reported a $12 million negligence suit- Contact client attorneys, possible contingent liability. Machinery purchased in outy 2017 not operational - Check on status Approved bosses for 12/31/20-$450,000 heeuses should be accrued at 12/31/20 Company approved $3,300,000 contribution to EBP Note for footnotes. No Superbowl ad this year-Note for analytic procedures structions Emails A-0 Planning Audit Program A-1 PBC 2019 Trial Balance A Signed Engagement Letter Apollo Shoes, Inc. 12/31/20 A-4 October 26, 2020 Mr. Larry Lancaster, Chairman Apollo Shoes, Inc. Shoetown, ME Dear Mr. Lancaster: This will confirm our understanding of the arrangements for auditing Apollo Shoes, Inc. financial statements for 2020. We will audit the balance sheet at December 31, 2020, and the related statements of income, retained earnings, and cash flows for the year ending that date. Our audit will be made in accordance with the Standards of the Public Company Accounting Oversight Board and will include such tests of the accounting records and such other auditing procedures as we consider necessary. Our audit will be based on samples of recorded transactions. We will plan the audit to detect material errors and frauds that may affect your financial statements. Our work, however, is subject to the unavoidable risk that errors, frauds, and illegal acts, will not be detected. We expect to obtain reasonable, but not absolute, assurance that major misstatements do not exist in the financial statements. Our findings regarding your system of internal control, including information about significant deficiencies and material weaknesses, will be reported to the audit committee of your board of directors in a separate letter at the close of the audit. At your request, but pending approval by your Board of Directors, we will prepare all required federal tax returns and the state franchise tax returns. We will provide your staff with a list of schedules needed by our staff during the audit. The delivery dates have been discussed and mutually agreed upon. We understand that your staff will prepare all the schedules in the package, all the financial statements and notes thereto, and the Form 10-K for our review. The scope of our services does not include preparation of any of these financial statements. Ms. Darlene Wardlaw will be the manager in charge of all work performed for you. She will inform you immediately if we encounter any circumstances that could significantly affect our fee estimate of $750,000 discussed with you on October 17, 2020. She is aware of the due date for the audit report, March 15, 2021. You should feel free to call on her at any time. If the specifications above are in accordance with your understand of the terms of our engagement, kindly sign below and return the duplicate copy to us. We look forward to serving you as independent public accountants. Accepted by /s/ Larry Lancaster Date 11/02/2020 CLIENT Apollo Sw ENGAGEMENT MATERIALITY Required for all expe Prepar PERIOD ENDED December 31, 2020 This completed form must be provided to the engagement quality control reviewer in the planning stage of every audit. Please complete all the cells highlighted in yellow PROFIT ENTED ENT ADRUSTED NET POMELO TOTALATY PLANNING MATERIALITY CALCULATION C JUSTIFICATION OF PLANNING MATERIALITY interf fl USE THE B JUSTIFY WHICH BASIS YOU'VE SELECTED AA 2019 Trial Balance Apollo Shoes, Inc Trial Balance (Audited) 31-Dec-19 PBC Account ID 10100 Cash on Hand 10200 Regular Checking Account Account Description Debit Credit Single Column format $1,987 28 $198.116.52 10300 Payroll Checking Account 10400 Savings Account $0.00 $1.987.28 $198,116.52 $0.00 $3,044,958.13 $3.044.958.13 11000 Accounts Receivable $16,410,902.71 $16,410,902.71 11500 Allowance for Doubtful Accounts $1.262.819.88 ($1,262,819.68) 12000 Inventory Spotlight $18,825.205.24 $18.825.205.24 12300 Reserve for Inventory Obsolescence $3,012.000.00 ($3.012.000.00) 14100 Prepaid Insurance $743,314.38 14200 Prepaid Rent 14300 Office Supplies 14400 Notes Receivable-Current 14700 Other Current Assets 15000 Land $200,000.00 $7.406.82 $117,000.00 15100 Buildings and Land Improvements $623,905.92 15200 Machinery. Equipment, Office Furniture $433,217.10 17000 Accum. Depreciation $163,500.00 19000 Investments 19900 Other Noncurrent Assets $572.691.08 $53,840.59 20000 Accounts Payable 23100 Sales Tax Payable 23200 Wages Payable $4,633,118.09 $0.00 $29,470.32 23300 FICA Employee Withholding $1,318.69 $583.99 $6,033.01 $743.314.38 $200,000.00 $7.406.82 $0.00 $0.00 $117.000.00 $623.905.92 $433.217.10 ($163,500.00) $572,691.08 $53.840.59 ($4.633.118.09) $0.00 ($29,470.32) ($1,318.69) ($583.99) ($6,033.01) 23350 Medicare Withholding 23400 Federal Payroll Taxes Payable 23500 FUTA Tax Payable $0.00 23600 State Payroll Taxes Payable 23700 SUTA Tax Payable 23800 FICA Employer Withholding $2,815.47 ($2.815.47) $0.00 $1,318.69 $1.318.69) 27000 Notes Payable-Noncurrent 23900 Medicare Employer Withholding 24100 Line of Credit 24200 Current Portion Long-Term Debt 24700 Other Current Liabilities 39003 Common Stock 39004 Paid-in Capital 39005 Retained Earnings $583.99 ($583.90) $10.000.000.00 ($10.000.000.00) $0.00 $0.00 $0.00 $8,105,000.00 ($8.105,000.00) $7,423,000.00 ($7.423.000.00) $2,219,620.65 ($2.219.620.65) 40000 Sales $246,172.918.44 ($246.172.918.44) 41000 Sales Returns $4,497,583.20 42000 Warranty Expense $1,100,281.48 45000 Income from Investments $0.00 46000 Interest Income $204,302.81 50010 Cost of Goods Sold $141.569.221.61 $4.497583.20 $1,100,281.48 $0.00 ($204,302.81) $141.569.221.61 57500 Freight $4,302.951.46 $4.302.951.46 60000 Advertising Expense 61000 Auto Expenses $897.140.01 $208,974.39 62000 Research and Development $31,212,334.17 64000 Depreciation Expense $133,000.00 64500 Warehouse Salaries $4,633.383.82 65000 Property Tax Expense 66000 Legal and Professional Expense $3,605,133.96 67000 Bad Debt Expense $1.622.425.99 68000 Insurance Expense 70000 Maintenance Expense 70100 Utilities 70110 Phone 70120 Postal 71000 Miscellaneous Office Expense $80,495.32 $853,942.65 $61,136.04 $135.642.99 $76,373.78 $128,033.21 $17,023.27 $897.140.01 $208,974.39 $31.212.334.17 $133.000.00 $4,633,383.82 $80,495.32 $3.605,133.96 $1.622.425.99 $853.942.65 $61.136.04 $135.642.99 $76.373.78 $128,033.21 72000 Payroll Tax Exp 73000 Pension/Profit-Sharing Plan Ex 74000 Rent or Lease Expense 77500 Administrative Wages Expense $1,550,989.06 $3,000,000.00 $2,603,485.87 $16,875,305.98 $17,023.27 $1,550.989.06 $3.000.000.00 $2.603,485.87 $16,875,305.98 78000 Interest Expense 78500 Income Tax Expense-Federal 78510 Income Tax Expense - State 80000 Loss on Legal Selement $875,000.00 $2.365,000.00 $429,000.00 $19,172,000.00 $875,000.00 $2.365,000.00 $429.000.00 $19.172.000.00