You are a fraud investigator who has been hired to detect financial statement fraud for the Chipmunk Company. You have been provided with the financial statements on the following pages and are now beginning your analysis of those financial statements.

1. Calculate the 2016 and 2015 liquidity ratios identified using the ratio analysis table below.

Also, calculate the change and the percentage change for the ratios and complete the table.

Prepare a table using the following based on the tables from Albrecht, Albrecht, Albrecht, and Zimbelman, 2016, p.189, 392-94

These data are to be used inserted into a table similar to the sample below and then used as the reference for a significant analysis in #2, below:

Liquidity Ratios 12-31-2016 12-31-2015 Change PercentChange IndustryAverage

Current Ratio

Quick Ratio

Sales/Receivables Ratio

Number of days sales in A/R Ratio

Inventory Turnover Ratio

2. Analyze the Chipmunk Companys ratios for both years and compare the figures, especially the number of days sales in A/R and the given industry ratios.

Based on EACH of the ratios identified, where do you think fraud may have occurred?

CHIPMUNK COMPANY BALANCE SHEET DECEMBER 31, 2016 AND 2015 Assets 2016 2015 Current assets Cash Accounts receivable: net (Notes 2 and 5) Inventories Notes 1(a), 3, and 5] Prepaid expenses Deposits $1,320,096 1 646,046 13,524,349 17,720 7,916 $16,516,127 596,517 $1,089,978 1,285,593 12,356,400 15,826 5,484 $14,753,281 612,480 Total current assets Property, plant, and equipment [Notes 1(b) and 4] at cost, less accumulated depreciation Total Assets Liablities Current liabilities $17112,644 $15,365,761 Notes payable-Bank (Note 5) Accounts payable Accrued liabilities Federal income taxes payable Currnt portion of long-term debt (Note 6) $5,100,000 1,750,831 257,800 35,284 5,642 $7,149,557 1,403,247 217,003 45,990 5,642 $5,921,882 Total current liabilities Long-termli term liabilities Long-term debt (Note 6) 409,824 415,466 Total Liabilities $7,559,381 $6,337 348 Stockholders' Equity Common stock (Note 7) Additional paid-in capital Retained earnings $10,000 2,500,000 7,043,263 $9,553,263 $17,112644 $10,000 2,500,000 6,518,413 $9,028,413 15,365,761 Total stockholders' equity Total Liabilities and Stockholders' Equity