You were engaged to examine the financial statements of Ronlyn Corporation for the year ended June 30 On May 1, the corporation borrowed $500,000 from the Second National Bank to finance plant expansion However, because of unexpected difficulties in acquiring the building site, the expansion had no...

a The dividend and interest income should be verified by comparing t ...

You were engaged to examine the financial statements of Ronlyn Corporation for the year ended June 30.

Question:

You were engaged to examine the of Ronlyn for the year ended June 30. On May 1, the borrowed $500,000 from the Second National Bank to finance plant expansion.
However, because of unexpected difficulties in acquiring the building site, the expansion had not begun as planned. To make use of the borrowed funds, management decided to invest in shares and bonds; on May 16 the $500,000 was invested in securities.

Required:
In your audit of investments, how would you:
a. Audit the recorded or interest income?
b. Determine market value?
c. Establish the authority for security purchases?

Financial Statements
Financial statements are the standardized formats to present the financial information related to a business or an organization for its users. Financial statements contain the historical information as well as current period’s financial... Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may... Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...