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B D G H 1 11 E 4 AUDIT OF THE REVENUE CYCLE Due: July 14, 2020 5 You are engaged to audit Merchandising Corporation for the year ended December 31, 2019. 6 Transactions are posted to the revenue and related accounts in the period recorded in the sales 7 journal 8 Inventory account has been decreased for all merchandise shipped to customers up to and including 9 December 30 10 All sales are on account and shipped FOB-shipping point 12 Inspection of Invoicet 115 revealed the following 13 10 items @ selling price $600 each for a total cost of $3,750 4 items @ selling price $700 each for a total cost of $1,250 15 Total cost of $5,000 17 The following sales invoices have been entered in the sales journal as indicated 18 a. You are to test each invoice for relevant assertions to determine if adjustment is required 19 If you determined that adjustment is required, please prepare the entries that would be required to be made by management at December 31, 2019 21 22 December 2019 23 Cost Invoice Sales Journal of Date Numbe Date Amount Goods Sold Shipped 14 16 20 24 25 Invoice# Shipp Dec? Call U Selling price $600 each for a total cost of $3,750 4 items @ selling price $700 each for a total cost of $1,250 Total cost of $5,000 H he following sales invoices have been entered in the sales journal as indicated 3. You are to test each invoice for relevant assertions to determine if adjustment is required If you determined that adjustment is required, please prepare the entries that would be required to be made by management at December 31, 2019 December 2019 Enter required Comment Invoice Numbe Date 101 Dec. 3 115 Dec. 9 120 Dec. 14 145 Dec 23 162 Dec 30 166 Dec. 30 175 Dec. 31 Cost Sales Journal of Date Amount Goods Sold Shipped $15.000 $10,000 Dec 2 8.000 5.000 Dec. 10 1,200 1,000 Dec. 14 Sale of excess office supplies 20,000 13,000 Dec 22 10,000 5,000 Dec 30 Shipped on consignment-out 12,000 8,000 Jan 15 9,000 6,000 Dec 31 Dec 30 Invoice# Shipped Dec sale? Recorded Inventory Dec? Dec? Decreased? 101 yes ves 115 yes ves yes 120 145 yes yes yes 162 ves yes yes 168 no 175 no January 2020 Course project eady O pboard Font Alignment Number 29 H 166 175 D Dec. 30 Dec. 31 E 12,000 9,000 F G 8,000 Jan. 15 6,000 Dec. 31 3 36 64 January 2020 35 188 Jan. 3 $7,500 $4,000 Dec. 31 195 Jan. 4 9,000 6,000 Jan 6 37 177 Dec 30 15,000 10,000 Jan. 6 38 201 Jan. 6 18,000 12,000 Jan. 7 39 40 b. You have selected several sales invoices recorded as revenue for 2019 41 Briefly describe a Substantive Test of the Occurrence Assertion 42 Answer: 43 44 45 46 c. You have selected a large accounts receivable balance of a new customer for 2019. Briefly describe a Substantive Test of the Existence Assertion 48 Answer: 49 50 Page 1 of 2 51 52 2 Name ==> Course project Type here to search o 50 Page 1 of 2 51 52 2 Name ==> 0 53 A review of the rent expense account disclosed that the account included $10,000 representing rent 54 for the month of December 2019, for a 10 year lease of a piece of equipment. The equipment has an 55 estimated useful life of 10 years with a residual value of $30,000 56 Merchandising Corporation had the option of paying the amount of $750,000 - the fair value of the 57 asset upon signing the lease on December 1, 2019, and retaining the equipment at the end of the 58 lease. The current interest rate is 6%. 59 The equipment is similar to other equipments used by Merchandising, depreciated on the 60 straight-line basis. 61 62 63 REQUIRED 64 You are to determine the proper treatment of the transaction. If you determined that the transaction 65 was properly handled, you should so state. If not, please prepare all entries that would be required to 66 properly report the lease in conformity with Generally Accepted Accounting Principles (GAAP) 67 68 Debit Credit 69 70 71 Course project Ready Number Styles F G 5 Merge & Center Clipboard $ - % - 0 Conditional Format Font Formatting Table Alignment B64 X You are to determine the proper treatment of the transaction. If you determined that the transaction B D E 49 H 50 Page 1 of 2 51 52 2 Name ==> 0 Journal entries 53 A review of the rent expense account disclosed that the account included $10,000 representing rent 54 for the month of December 2019, for a 10 year lease of a piece of equipment. The equipment has an 55 estimated useful life of 10 years with a residual value of $30,000. 56 Merchandising Corporation had the option of paying the amount of $750,000 - the fair value of the 57 asset upon signing the lease on December 1, 2019, and retaining the equipment at the end of the 58 lease. The current interest rate is 6%. 59 The equipment is similar to other equipments used by Merchandising, depreciated on the 60 straight-line basis. 61 62 63 REQUIRED 64 You are to determine the proper treatment of the transaction. If you determined that the transaction 65 was properly handled, you should so state. If not, please prepare all entries that would be required to 66 properly report the lease in conformity with Generally Accepted Accounting Principles (GAAP) 68 Debit Credit 67 69 70 741 Course project + BI ST Type here to search B F H 11 E 5 You are engaged to audit Merchandising Corporation for the year ended December 31, 2019. 6 Transactions are posted to the revenue and related accounts in the period recorded in the sales 7 journal 8 Inventory account has been decreased for all merchandise shipped to customers up to and including 9 December 30 10 All sales are on account and shipped FOB shipping point 12 Inspection of Invoice# 115 revealed the following 13 10 items @ selling price $600 each for a total cost of $3,750 4 items @ selling price $700 each for a total cost of $1,250 Total cost of $5,000 17 The following sales invoices have been entered in the sales journal as indicated. 18 a. You are to test each invoice for relevant assertions to determine if adjustment is required If you determined that adjustment is required, please prepare the entries that would be required to be made by management at December 31, 2019 December 2019 Cost Invoice of Numbe Date Amount Goods Sold Shipped 101 Dec 3 $15,000 $10.000 Dec 2 14 15 16 19 20 21 22 23 24 25 26 Sales Journal Date Invoice# SH De 101 Course nrniert 6 1 2 D E G be required to be made by management at December 31, 2019 December 2019 Cost 4 Invoice Sales Journal of Date 5 Numbe Date Amount Goods Sold Shipped 26 101 Dec. 3 $15,000 $10,000 Dec. 2 27 115 Dec. 9 8,000 5,000 Dec 10 28 120 Dec 14 1,200 1,000 Dec 14 Sale of excess office supplies 29 145 Dec 23 20,000 13,000 Dec. 22 30 162 Dec 30 10,000 5,000 Dec 30 Shipped on consignment-out 31 166 Dec 30 12,000 8,000 Jan 15 32 175 Dec. 31 9,000 6,000 Dec. 31 33 34 January 2020 35 188 Jan. 3 $7,500 $4,000 Dec 31 36 195 Jan. 4 9,000 6,000 Jan 6 37 177 Dec 30 15,000 10,000 Jan 6 38 201 Jan 6 18,000 12,000 Jan 7 39 40 b. You have selected several sales invoices recorded as revenue for 2019 Briefly describe a Substantive Test of the Occurrence Assertion AB G be required to be made by management at December 31, 2013 3 4 laroice Shipp Dec? 5 101 07 December 2013 Cost laroice Sales Jourd of Date Numb Date Amount Goods Sok Shipped 101 Dec. 3 $15,000 $10,000 Dec 2 115 Dec. 9 8,000 5,000 Dec. 10 120 Dec. 14 1,200 1000 Dec. 14 145 Dec 23 20,000 13,000 Dec. 22 162 Dec. 30 10,000 5,000 Dec 30 166 Dec. 30 12,000 8,000 Jan. 15 175 Dec 31 9,000 6,000 Dec. 31 ca Sale of excess office supplie: Skipped on consignment-out 115 120 145 162 166 175 pes yor 31 32 no 35 188 188 195 177 201 January 2020 Jan. 3 $7,500 Jan. 4 9,000 Dec 30 15,000 Jan. 6 18,000 $4,000 6,000 10,000 12,000 37 Dec. 31 Jan. 6 Jan. 6 Jan. 7 195 177 201 b. You have selected several sales invoices recorded as revenue for 2013, Briefly describe a Substantive Test of the Occurrence Assertion 45 45 46 c. You have selected a large accounts receivable balance of a new customer for 2019 Briefly describe a Substantive Test of the Existence Assertion Peq.1-f2 Journal catries reg 50 51 52 53 54 55 56 57 50 59 2 Nantes A review of the rent expense sccount disclosed that the account included $10,000 representing rent for the month of December 2013, for a 10 year lease of a piece of equipment. The equipment has an estimated useful life of 10 years with a residual value of $30,000 Merchandising Corporation had the option of paying the amount of $750,000 - the fair value of the set upon signing the lease on December 1, 2019, and retaining the equipment at the end of the lesce. The current interest rate is 6% The equipment is similar to other equipments used by Merchandising, depreciated on the straight-linc basis. 11 REQUIRED Course project Type here to search File Hortie Insert Draw Page Layout Formulas Data Arial 10 WA A Paste BIU - 2-A-EEEES Clipboard Font Alignme J44 X fo H D 4 AUDIT OF THE REVENUE CYC! Duc: July 14, 2020 5 You are engaged to audit Merchandising Corporation for the year ended December 31, 2013. Transactions are posted to the revenue and related accounts in the period recorded in the sales 7 journal 8 Inventory account has been decreased for all merchandise shipped to customers up to and including $ December 30. All sales are on account and shipped FOB-chipping point. 11 12 Inspection of Invoice# 115 revealed the following: 13 10 items selling price $600 each for a total cost of $3,750 14 4 items @ selling price $700 each for a total cost of $1,250 15 Total cost of $5,000 16 17 The following sales invoices have been entered in the sales journal as indicated. a. You are to test each invoice for relevant assertions to determine if adjustment is required. 19 If you determined that adjustment is required, please prepare the entries that would 20 be required to be made by management at December 31, 2019 21 22 Decesber 2013 23 Cost leroice Sales Joure of Date 25 Hab Date Amount foods Sok Slipped Invoice Shipped 101 Dec 3 $15,000 Dec? $10,000 Dec. 2 27 115 Dec. 9 8,000 101 5.000 Dec. 10 28 120 Dec. 14 115 1,200 1,000 Dec. 14 Sale of excess office supplie: 29 145 Dec. 23 20,000 120 13,000 Dec. 22 30 162 Dec. 30 10,000 145 5,000 Dec 30 Dec 30 Shipped on consiganeat-out 166 Dec 30 12,000 162 yo 8,000 32 175 Jan. 15 Dec. 31 9,000 166 6,000 Dec. 31 175 no January 2020 35 188 Jan 3 $7,500 $4,000 195 Dec. 31 Jan. 4 9,000 188 37 6,000 177 Jan. 6 Dec. 30 15,000 195 33 201 10,000 Jon 6 Jan. 6 18,000 177 39 12,000 Jon 7 201 40 b. You have selected several sales invoice tecorded as revenue for 2013 41 Briefly describe Substantive Test of the Occurrence Assertion 42 44 45 46 47 49 You have selected slotge accounts receivable balance of new customer for 2013 Briefly describe Substantive Test of the Existence Assertion Course project Type here to search 144 H AB E 18,000 F 12,000 G Jan 7 201 Jan 6 41 b. You have selected several sales invoices recorded as revenue for 2019 Briefly describe a Substantive Test of the Occurrence Assertion Answer 4 45 c. You have selected a large accounts receivable balance of a new customer for 2019 Briefly describe a Substantive Test of the Existence Assertion Answer 49 50 Page 1 of 2 Ja 56 2 Name ==> A review of the rent expense account disclosed that the account included $10,000 representing rent for the month of December 2019. for a 10 year lease of a piece of equipment. The equipment has an estimated useful life of 10 years with a residual value of $30,000 Merchandising Corporation had the option of paying the amount of $750,000 - the fair value of the asset upon signing the lease on December 1, 2019, and retaining the equipment at the end of the lease. The current interest rate is 6% The equipment is similar to other equipments used by Merchandising, depreciated on the straight-line basis 0 REQUIRED You are to determine the proper treatment of the transaction. If you determined that the transaction was property handied, you should 50 state. If not, please prepare al entries that would be required to property report the lease in conformity with Generally Accepted Accounting Principles (GAAP) Debit Credit Course project Type here to search o B D G H 1 11 E 4 AUDIT OF THE REVENUE CYCLE Due: July 14, 2020 5 You are engaged to audit Merchandising Corporation for the year ended December 31, 2019. 6 Transactions are posted to the revenue and related accounts in the period recorded in the sales 7 journal 8 Inventory account has been decreased for all merchandise shipped to customers up to and including 9 December 30 10 All sales are on account and shipped FOB-shipping point 12 Inspection of Invoicet 115 revealed the following 13 10 items @ selling price $600 each for a total cost of $3,750 4 items @ selling price $700 each for a total cost of $1,250 15 Total cost of $5,000 17 The following sales invoices have been entered in the sales journal as indicated 18 a. You are to test each invoice for relevant assertions to determine if adjustment is required 19 If you determined that adjustment is required, please prepare the entries that would be required to be made by management at December 31, 2019 21 22 December 2019 23 Cost Invoice Sales Journal of Date Numbe Date Amount Goods Sold Shipped 14 16 20 24 25 Invoice# Shipp Dec? Call U Selling price $600 each for a total cost of $3,750 4 items @ selling price $700 each for a total cost of $1,250 Total cost of $5,000 H he following sales invoices have been entered in the sales journal as indicated 3. You are to test each invoice for relevant assertions to determine if adjustment is required If you determined that adjustment is required, please prepare the entries that would be required to be made by management at December 31, 2019 December 2019 Enter required Comment Invoice Numbe Date 101 Dec. 3 115 Dec. 9 120 Dec. 14 145 Dec 23 162 Dec 30 166 Dec. 30 175 Dec. 31 Cost Sales Journal of Date Amount Goods Sold Shipped $15.000 $10,000 Dec 2 8.000 5.000 Dec. 10 1,200 1,000 Dec. 14 Sale of excess office supplies 20,000 13,000 Dec 22 10,000 5,000 Dec 30 Shipped on consignment-out 12,000 8,000 Jan 15 9,000 6,000 Dec 31 Dec 30 Invoice# Shipped Dec sale? Recorded Inventory Dec? Dec? Decreased? 101 yes ves 115 yes ves yes 120 145 yes yes yes 162 ves yes yes 168 no 175 no January 2020 Course project eady O pboard Font Alignment Number 29 H 166 175 D Dec. 30 Dec. 31 E 12,000 9,000 F G 8,000 Jan. 15 6,000 Dec. 31 3 36 64 January 2020 35 188 Jan. 3 $7,500 $4,000 Dec. 31 195 Jan. 4 9,000 6,000 Jan 6 37 177 Dec 30 15,000 10,000 Jan. 6 38 201 Jan. 6 18,000 12,000 Jan. 7 39 40 b. You have selected several sales invoices recorded as revenue for 2019 41 Briefly describe a Substantive Test of the Occurrence Assertion 42 Answer: 43 44 45 46 c. You have selected a large accounts receivable balance of a new customer for 2019. Briefly describe a Substantive Test of the Existence Assertion 48 Answer: 49 50 Page 1 of 2 51 52 2 Name ==> Course project Type here to search o 50 Page 1 of 2 51 52 2 Name ==> 0 53 A review of the rent expense account disclosed that the account included $10,000 representing rent 54 for the month of December 2019, for a 10 year lease of a piece of equipment. The equipment has an 55 estimated useful life of 10 years with a residual value of $30,000 56 Merchandising Corporation had the option of paying the amount of $750,000 - the fair value of the 57 asset upon signing the lease on December 1, 2019, and retaining the equipment at the end of the 58 lease. The current interest rate is 6%. 59 The equipment is similar to other equipments used by Merchandising, depreciated on the 60 straight-line basis. 61 62 63 REQUIRED 64 You are to determine the proper treatment of the transaction. If you determined that the transaction 65 was properly handled, you should so state. If not, please prepare all entries that would be required to 66 properly report the lease in conformity with Generally Accepted Accounting Principles (GAAP) 67 68 Debit Credit 69 70 71 Course project Ready Number Styles F G 5 Merge & Center Clipboard $ - % - 0 Conditional Format Font Formatting Table Alignment B64 X You are to determine the proper treatment of the transaction. If you determined that the transaction B D E 49 H 50 Page 1 of 2 51 52 2 Name ==> 0 Journal entries 53 A review of the rent expense account disclosed that the account included $10,000 representing rent 54 for the month of December 2019, for a 10 year lease of a piece of equipment. The equipment has an 55 estimated useful life of 10 years with a residual value of $30,000. 56 Merchandising Corporation had the option of paying the amount of $750,000 - the fair value of the 57 asset upon signing the lease on December 1, 2019, and retaining the equipment at the end of the 58 lease. The current interest rate is 6%. 59 The equipment is similar to other equipments used by Merchandising, depreciated on the 60 straight-line basis. 61 62 63 REQUIRED 64 You are to determine the proper treatment of the transaction. If you determined that the transaction 65 was properly handled, you should so state. If not, please prepare all entries that would be required to 66 properly report the lease in conformity with Generally Accepted Accounting Principles (GAAP) 68 Debit Credit 67 69 70 741 Course project + BI ST Type here to search B F H 11 E 5 You are engaged to audit Merchandising Corporation for the year ended December 31, 2019. 6 Transactions are posted to the revenue and related accounts in the period recorded in the sales 7 journal 8 Inventory account has been decreased for all merchandise shipped to customers up to and including 9 December 30 10 All sales are on account and shipped FOB shipping point 12 Inspection of Invoice# 115 revealed the following 13 10 items @ selling price $600 each for a total cost of $3,750 4 items @ selling price $700 each for a total cost of $1,250 Total cost of $5,000 17 The following sales invoices have been entered in the sales journal as indicated. 18 a. You are to test each invoice for relevant assertions to determine if adjustment is required If you determined that adjustment is required, please prepare the entries that would be required to be made by management at December 31, 2019 December 2019 Cost Invoice of Numbe Date Amount Goods Sold Shipped 101 Dec 3 $15,000 $10.000 Dec 2 14 15 16 19 20 21 22 23 24 25 26 Sales Journal Date Invoice# SH De 101 Course nrniert 6 1 2 D E G be required to be made by management at December 31, 2019 December 2019 Cost 4 Invoice Sales Journal of Date 5 Numbe Date Amount Goods Sold Shipped 26 101 Dec. 3 $15,000 $10,000 Dec. 2 27 115 Dec. 9 8,000 5,000 Dec 10 28 120 Dec 14 1,200 1,000 Dec 14 Sale of excess office supplies 29 145 Dec 23 20,000 13,000 Dec. 22 30 162 Dec 30 10,000 5,000 Dec 30 Shipped on consignment-out 31 166 Dec 30 12,000 8,000 Jan 15 32 175 Dec. 31 9,000 6,000 Dec. 31 33 34 January 2020 35 188 Jan. 3 $7,500 $4,000 Dec 31 36 195 Jan. 4 9,000 6,000 Jan 6 37 177 Dec 30 15,000 10,000 Jan 6 38 201 Jan 6 18,000 12,000 Jan 7 39 40 b. You have selected several sales invoices recorded as revenue for 2019 Briefly describe a Substantive Test of the Occurrence Assertion AB G be required to be made by management at December 31, 2013 3 4 laroice Shipp Dec? 5 101 07 December 2013 Cost laroice Sales Jourd of Date Numb Date Amount Goods Sok Shipped 101 Dec. 3 $15,000 $10,000 Dec 2 115 Dec. 9 8,000 5,000 Dec. 10 120 Dec. 14 1,200 1000 Dec. 14 145 Dec 23 20,000 13,000 Dec. 22 162 Dec. 30 10,000 5,000 Dec 30 166 Dec. 30 12,000 8,000 Jan. 15 175 Dec 31 9,000 6,000 Dec. 31 ca Sale of excess office supplie: Skipped on consignment-out 115 120 145 162 166 175 pes yor 31 32 no 35 188 188 195 177 201 January 2020 Jan. 3 $7,500 Jan. 4 9,000 Dec 30 15,000 Jan. 6 18,000 $4,000 6,000 10,000 12,000 37 Dec. 31 Jan. 6 Jan. 6 Jan. 7 195 177 201 b. You have selected several sales invoices recorded as revenue for 2013, Briefly describe a Substantive Test of the Occurrence Assertion 45 45 46 c. You have selected a large accounts receivable balance of a new customer for 2019 Briefly describe a Substantive Test of the Existence Assertion Peq.1-f2 Journal catries reg 50 51 52 53 54 55 56 57 50 59 2 Nantes A review of the rent expense sccount disclosed that the account included $10,000 representing rent for the month of December 2013, for a 10 year lease of a piece of equipment. The equipment has an estimated useful life of 10 years with a residual value of $30,000 Merchandising Corporation had the option of paying the amount of $750,000 - the fair value of the set upon signing the lease on December 1, 2019, and retaining the equipment at the end of the lesce. The current interest rate is 6% The equipment is similar to other equipments used by Merchandising, depreciated on the straight-linc basis. 11 REQUIRED Course project Type here to search File Hortie Insert Draw Page Layout Formulas Data Arial 10 WA A Paste BIU - 2-A-EEEES Clipboard Font Alignme J44 X fo H D 4 AUDIT OF THE REVENUE CYC! Duc: July 14, 2020 5 You are engaged to audit Merchandising Corporation for the year ended December 31, 2013. Transactions are posted to the revenue and related accounts in the period recorded in the sales 7 journal 8 Inventory account has been decreased for all merchandise shipped to customers up to and including $ December 30. All sales are on account and shipped FOB-chipping point. 11 12 Inspection of Invoice# 115 revealed the following: 13 10 items selling price $600 each for a total cost of $3,750 14 4 items @ selling price $700 each for a total cost of $1,250 15 Total cost of $5,000 16 17 The following sales invoices have been entered in the sales journal as indicated. a. You are to test each invoice for relevant assertions to determine if adjustment is required. 19 If you determined that adjustment is required, please prepare the entries that would 20 be required to be made by management at December 31, 2019 21 22 Decesber 2013 23 Cost leroice Sales Joure of Date 25 Hab Date Amount foods Sok Slipped Invoice Shipped 101 Dec 3 $15,000 Dec? $10,000 Dec. 2 27 115 Dec. 9 8,000 101 5.000 Dec. 10 28 120 Dec. 14 115 1,200 1,000 Dec. 14 Sale of excess office supplie: 29 145 Dec. 23 20,000 120 13,000 Dec. 22 30 162 Dec. 30 10,000 145 5,000 Dec 30 Dec 30 Shipped on consiganeat-out 166 Dec 30 12,000 162 yo 8,000 32 175 Jan. 15 Dec. 31 9,000 166 6,000 Dec. 31 175 no January 2020 35 188 Jan 3 $7,500 $4,000 195 Dec. 31 Jan. 4 9,000 188 37 6,000 177 Jan. 6 Dec. 30 15,000 195 33 201 10,000 Jon 6 Jan. 6 18,000 177 39 12,000 Jon 7 201 40 b. You have selected several sales invoice tecorded as revenue for 2013 41 Briefly describe Substantive Test of the Occurrence Assertion 42 44 45 46 47 49 You have selected slotge accounts receivable balance of new customer for 2013 Briefly describe Substantive Test of the Existence Assertion Course project Type here to search 144 H AB E 18,000 F 12,000 G Jan 7 201 Jan 6 41 b. You have selected several sales invoices recorded as revenue for 2019 Briefly describe a Substantive Test of the Occurrence Assertion Answer 4 45 c. You have selected a large accounts receivable balance of a new customer for 2019 Briefly describe a Substantive Test of the Existence Assertion Answer 49 50 Page 1 of 2 Ja 56 2 Name ==> A review of the rent expense account disclosed that the account included $10,000 representing rent for the month of December 2019. for a 10 year lease of a piece of equipment. The equipment has an estimated useful life of 10 years with a residual value of $30,000 Merchandising Corporation had the option of paying the amount of $750,000 - the fair value of the asset upon signing the lease on December 1, 2019, and retaining the equipment at the end of the lease. The current interest rate is 6% The equipment is similar to other equipments used by Merchandising, depreciated on the straight-line basis 0 REQUIRED You are to determine the proper treatment of the transaction. If you determined that the transaction was property handied, you should 50 state. If not, please prepare al entries that would be required to property report the lease in conformity with Generally Accepted Accounting Principles (GAAP) Debit Credit Course project Type here to search o