AUDITING PROBLEMS PROBLEM 1 NDU Corporation has 32,000 shares of P2 par common stock authorized. Only !

" of these shares ha#e $een issued, and of the shares issued, only 22,000 are outstandin%. On Decem$er 3&, 200', the stockholders( e)uity section re#ealed that the $alance in Paid*in Capital in +,cess of Par -alue . Common /as P032,000, and the 1etained +arnin%s /as P&20,000. 2reasury stock /as purchased at an a#era%e cost of P30 per share. Durin% 200 NDU Corporation had the follo/in% transactions4 5an &! 7e$ & 8ar &! 9pr &! 30 NDU issued, at P!2.!0 per share, &,'00 shares of P!0 par, 3" cumulati#e preferred stock6 3,000 share are authorized. NDU sold 3,000 share of ne/ly issued P2 par common stock at P3! per share. NDU declared a cash di#idend on common stock of P0.20 per share, paya$le on 9pril 30 to all stockholders of record on 9pril &. NDU reac)uired 300 shares of its common stock for P30 per share. +mployees e,ercised 2,000 stock options %ranted in &:::. ;hen the option /ere %ranted, each option entitled the employees to purchase & share of common stock for P!0 per share. 2he share price on the %rant date /as P'0 per share. On 9pril 30, /hen the market price /as P!! per share, NDU issued ne/ shares to the employees. NDU declared a 2!" stock di#idend to common stockholders to $e distri$uted on 5une & to stockholders of record 8ay . 2he market price of the common stock /as P!0 per share on 8ay &. NDU sold 300 treasury shares reac)uired on 9pril &! and an additional 300 shares costin% P&',000 that had $een on hand since the $e%innin% of the year. 2he sellin% price /as P'0 per share. 2he semiannual cash di#idend on common stock /as declared, amountin% to P0.20 per share. NDU also declared the yearly di#idend on preferred stock. =oth are paya$le on Octo$er &! of record on Octo$er &.

8ay &

3&

<ept &!

Net income for 200 /as P&!0,000. Questions: &. 2. 3. 2he preferred stock $alance on Decem$er 3&, 200 should $e a. P 00,000 $. P 03,000 c. P 0',000 2he common stock $alance on Decem$er 3&, 200 should $e a. P !',000 $. P '&,300 c. P &,300 d. P :0,000 d. P !,300

2he paid*in capital in e,cess of par . common $alance at Decem$er 3&, 200 should $e a. P 23!,000 $. P :'&,000 c. P &,0 ,000 d. P &,3:',200 2he paid*in capital in e,cess of par . preferred $alance at Decem$er 3&, 200 should $e a. P 3,000 $. P 20,000 c. P 00,000 d. P :3,'00 2he di#idends paya$le . common $alance at Decem$er 3&, 200 should $e a. P 0,3:3 $. P 0,233 c. P 3, !0 d. P 0

3.

!.

PROBLEM 2 ND8C Corporation has $een in its plant facility for &0 years. 9lthou%h the plant is )uite functional, numerous repair costs are incurred to maintain it in sound /orkin% order. 2he company(s plant asset $ook #alue is currently P3,000,000 as indicated $elo/4 Ori%inal cost 9ccumulated depreciation Net carryin% #alue ',000,000 3,000,000 3,000,000

Durin% the current year, the follo/in% e,penditures /ere made to the plant facility4

P :2 .000 a$o#e. .000. 200 B a.000 shares of 8% P100 preferred stock of 'l (orp. P 2.000 $ecause parts of the /ood structure /ere rottin%.23 .hat is the total interest income on in#estment in $onds for a.!00 $. 2he entire plant /as repainted at a cost of P233.!00 c. 2he roof /as an as$estos cement slate6 for safety purposes it /as remo#ed and replaced /ith a /ood shin%le roof at a cost of P 00.!00 .&00.02 . Problem 2he follo/in% entries /ere made $y the accountant of ND8U CO8P9N@4 200 5an 2 >n#estment in $onds &&. 2he ori%inal cost /as P3&0. P20. P 0. 18% bonds at 102plus accrued interest and broker’s fee. 3.000 c.000 d.o broker’s fee. P &.000 Premium paid on preferred stock Di#idend income -i!idend recei!ed on preferred stock in!estment !0.000 0. the company increased its plant capacity $y $uildin% a ne/ addition at a cost of P&. P &.000 9fter considerin% the transactions Depreciation account should $e a.330.!00 200 B d. >t is estimated that the useful life of the $uildin% /ill not chan%e as a result of this updatin%.000 $. Dec 3&Cash 000. 9fter considerin% the transactions a$o#e.000.&20. 2hese e. at P100 per share after a P1 per share di!idend had been declared by +andy (o. Bonds mature January 1.000 >n#estment in common stock P1 per share on in!estment in common stock 200.000 c.000 Auestion4 :.&20.hat is the carryin% #alue of the in#estment in $onds at Decem$er 3&. !.000 nterest recei!ed on 18% in!estment in bonds.000 d.200. 2. 2he electrical system /as completely updated at a cost of P300.000 Dec & >n#estment in common stock !.000.000 Purchase of 100.220. at 102) broker’s fee. 2. =ecause of increased demand for its product. "#his same entry $as made $hen interest $as recei!ed on July 1. 200%&.000.000 Purchase of P10.000 shares P100 par common stock of +andy (o.000 Purchase of *0.000 2he loss from replacement of roof is a.000. P 3. P &0.000. 2he cost of the old electrical system /as not kno/n. Questions: '.000. P 0. P 2. P 0. P &0.000 Cash &&.000 $. P 0 $.000 Cash &0.0:2. P &0.000. P 2. 9 series of ma?or repairs /ere made at a cost of P'30.000 d. P &00. 5uly & >n#estment in preferred stock &0.000.000 '00.020. 30. P &&.230.000 c. the $alance of the =uildin%s account should $e a.000. 2010.hat is the di#idend income on preferred stock in#estment for 200 B .tensi#e repairs are estimated to increase the useful life of the $uildin%. P &. the $alance of the 9ccumulated .&.000 Premium paid on preferred stock 200.!00 &0.000.000 Dec 3&Cash !0. P &30.' 2.''0.000.'&0. 5an 3 Cash :00.000 Cash !.000 d. 2he cost of the old /ood structure /as not kno/n.000 >nterest income :00. P 0. P 3&0.&:2. 3. &&. =ook #alue of the old roof /as P&30. . c.020.!00 $. .

3!0 $. !. 200 totalin% P&. you disco#ered the follo/in%4 &. &&. 1etained earnin%s !0. 2he ad?usted $ank $alance as of Decem$er 3&. 200 . 200' year*end cash &'&. 200 .300 &'3. 00 2he correct cash $alance. 0. P '00. Di#idend income !0.000 d. 9ccordin% to the $ank statement for the period from 5anuary 2. 200 . P &' . NDDU Corporation de$ited >n#entory and credited 9ccounts 1ecei#a$le.000 c. P &!0. 200 to 5anuary &0. 200 . >n the outstandin% checks. P &'0. &3. Auestions4 &3. per led%er as of Decem$er 3&.:!0 d. 200 . there /ere receipts for collection from customer on 5anuary :. you started the audit of the financial records of NDDU Corporation for the year ended Decem$er 3&.000 >n#est.0!0 &!.300. >n C< !0. 7rom 5anuary 2.a. P 0 $.:00 d. 2he $ookkeeper acts also as the cashier. 200' is4 a. '. P &! .hat ad?ustin% entry should $e made at Decem$er 3&. 2his /as $ooked $y a de$it to 9llo/ance for Dou$tful 9ccounts and a credit to 9ccounts 1ecei#a$le.2!0 /as issued in its place6 the ori%inal check for P !0 /as made in error as to amount.'00 /as recei#ed from a customer in settlement of his account. total cash receipts appearin% in the cash record /ere P30. P &' . P 000. &2D3&D03 Checks outstandin% =in% Corporation check char%ed $y $ank in error &3D30D03. to correct the in#estment in common stock accountB a. . total deposits /ere P32.'00.000 d. totalin% P3. cash of P2.300 &.000 &2.2!06 these /ere unrecorded and undeposited. reconciliation contained the follo/in%4 Cer Decem$er 3&. P &!'. 2he cash account $alance per led%er as of &2D3&D03 /ere4 Cash Petty Cash &'&.000 >n#est. 1etained earnin%s !0.0!0 E 000F E 300F :00 &&.000 recei#ed from customer durin% 200' /as not recorded. there is one for P !0 made paya$le to a trade creditor.!00 3. the $ank refunded interest of P200 $ecause a note of NDDU Corporation /as paid $efore maturity. 00 $. 200'. P &!0. cash of P&.0!0 !0 . No entry had $een made for the refund. 200 . 200' and a ne/ check for P&.000 $.200 /ere not recorded $ut /ere deposited in the $ank. P &':.0!0 3. 200' is4 a. 200'. On 5uly !. in C< !0. 00 . 2he cost of the cash on hand at the close of $usiness on 5anuary &0. 200'.200 Cash per led%er. On 5uly &. 00 c. :. Checks recei#ed from customers from 5anuary 2. the date of your cash count. . 200 to 5anuary &0. 7rom your in#esti%ation.:00 /as recei#ed from a customer in settlement of his account. corrected $y $ank on &D03D0! Deposit in transit. On Decem$er !. &0. Cash of P&. No ad?ustin% entry Di#idend income !0.000 Problem ! On 5anuary &0. >n the cashiers petty cash. >n#esti%ation sho/s that this check had $een returned $y the creditor on 5une &3. credit $y $ank on &D3D0! 2. includin% the petty cash /as as follo/s4 Currencies and coins +. 200 to 5anuary &0.000 c. &2D3&D03 Cash per $ank. 200'.pense #ouchers +mployees( >OU dated &D!D0! Customers( checks in payment of account :.'!0 c. P 200.

%oods and ser#ices purchases on open account amount to P!'0. 2he maturities of these notes are %i#en $elo/. 2003 are estimated at P'30.000 d. NDGC has ! million. NDGC uses strai%ht line method to amortize $ond discount. P &0. 200!* 8arch 3&. 2he follo/in% information relates the o$li%ations of the company as of 8arch 3&. >nterest is paid semi* annually on Octo$er & and 9pril &. P &0.&00. 2003. 9$am(s $oard of directors declared a cash di#idend of P0. P 3. P0 $. amounted to P2!2.!00.000 $. 200' is4 a. 00 Problem " 9$am Corporation is sellin% audio and #ideo appliances. at P&'. 200 is4 a.000 c. 2000 9mount P '00. 2003 <eptem$er &. 2003.000 as of 8arch 3&.:!0 d. P!. 2he company(s fiscal year ends on 8arch 3&. P .000 P!3 . 2003 to common stockholders on record at the close of $usiness on 8arch 3&. P33!. P&&0.!:0. P300.000 c. P . 20. 2003.000 :00.000.33!.30 per common share and a &0" common stock di#idend.000 on 8arch 3&. determine the ad?usted $alances of the follo/in% as of 8arch 3&.000 c. 2he /arranty costs on sales made from 9pril &. P&00.000.000 =ond interest paya$le a. 2000. =oth di#idends /ere to $e distri$uted on 9ptil !.arranty claims honored on 2002* 2003 .!00 $. P .000 2. P!.2!0 c. Notes paya$le 9$am has si%ned se#eral lon%* term notes /ith financial institutions. ND+9 had no o/nership interest in <imultaneous prior to this purchase. 2he $onds /ill mature on Octo$er &. 9t the time of the purchase.000 d.300 $.000 c. P200.000 shares of <imultaneous Corp. on Octo$er &.&0!. 2003. 2003 5uly 3&.33!.!00 d. &0.000 3!0.000.000 2rade paya$les 9ccounts paya$le for supplies.000 +stimated /arranties4 9$am has one year product /arranty on some selected items. &:.000 Unamortized $ond discount a.200 2he amount of cash shorta%e for the period from 5anuary &. P . P&!0. 2&. a. +stimated /arranty paya$le P2!2. Due date 9pril 3&. =onds paya$le NDGC issued P!.000.000 PROBLEM # ND+9 Company purchased 2!0. 00. P &'. <imultaneous had &.000 d.000 2otal noncurrent lia$ilities a. P'.000 d. 200'. 200 to 5anuary &0. 2he actual /arranty costs incurred durin% 2003* 2003 fiscal year as follo/s4 . 200! 9pril &.000 P!. 2he estimated /arranty lia$ility on sales made durin% the 2002* 2003 fiscal year and still outstandin% as of 8arch 3&. P002.000 $. 2003. P3.000 common shares outstandin%. P'30. 2he amount of cash shorta%e as of Decem$er 3&. P2 par #alue common stock shares issued and outstandin%.000 3!0. P2!0. P 0. 2003 to 8arch 3&.000 c.arranty claims honored on 2003* 2003 sales 2otal P2!2. &::0 at :'.:3!.000 20!. &2" $onds. 2003 7e$ruary &. 20034 & . P &&.!0 per share. /hich reflected $ook #alue as of that date. P . common stock on 5uly &.000 2otal current lia$ilities a. <imultaneous reported net . &'. Di#idends On march &0.&!. 00. P &!. =ased on the for%oin% information. P:0.000 $.000.000 c. 9s of 8arch 3&.000 $. 2003.'&0.000 d. 2003. 2he total unpaid interest for all of these notes amount to P330.

months ended 5une 30. 2he cumulati#e effect of the chan%e from e)uity to cost method of accountin% for the in#estment in common stock to $e reported in the statement of chan%es in e)uity should $e a. .000 de$it d.hat is the %ain on sale of &00. and a%ain paid ND+9 Company di#idends of P&0!. 200 . Pricin% tests sho/ed that physical in#entory /as o#erstated $y P&!3.000 .000. the o$solete materials /ere /ritten off $y a chan%e to cost of sales. 2.tensions. P3. '3.000 d. P230.000.000 shares on 5anuary &. the company decided not to ad?ust the $ook in#entory until year end e.:32. 200 .000 c.000 for the si.000. @ou o$ser#ed the takin% of the in#entory and made tests of the in#entory count and the in#entory records. upon your recommendation. paid ND+9 Company di#idends of P'0. 2o reduce the /ork load at year*end. 200'. 200'.cept for o$solete in#entory. <crap loss on esta$lished product lines is normally insi%nificant. 2003.0'0. P0 2'. 3.2'0. a special order started and completed durin% Decem$er had a scrap loss of P!'. 2003. P30.&!!. P3.000 for the year ended Decem$er 3&.23:.:00 /as understated $y P2&0. 200'.000 &. >n#entories are #alued at cost.000 c. P2.!00 due to errors in footin%s and e.000 credit $. 23. P30.000.000 PROBLEM $ @ou are en%a%ed in the re%ular annual e. <imultaneous reported net income of P&. P3. Co/e#er. 2otal de$its to the follo/in% accounts durin% Decem$er /ere4 Cost of sales Direct la$or 8anufacturin% e.000 H 03 .000 d.000. P3.000 &.!00.000.000. Auestions4 22. the company.000 d.000 from <imultaneous on 9u%ust &. @ou ha#e ascertained that the amount of direct la$or /as correct and that the o#erhead rate /as proper. P!0.000 and manufacturin% o#erhead of P&. 2he physical in#entory included o$solete materials /ith a total cost of P& .pense Purchases 3. .000 $. 2o a#oid delay in completin% its monthly financial statements. took its annual physical in#entory on No#em$er 30.hat is the in#estment $alance on Decem$er 3&.&2!. first*in. <imultaneous reported net income of P&.&!!. P2 :.000 $.amination disclosed the follo/in% information re%ardin% the No#em$er 30 in#entory4 &.000 $. P'0. 2:.002. 2here is no finished %oods in#entory.hat is the in#estment $alance on Decem$er 3&. 2he company(s physical in#entory re#ealed that the $ook in#entory of P3. 2he company(s in#entory account. '3. @our audit also disclosed the follo/in% information a$out the Decem$er 3& in#entory4 &.000 for the year ended Decem$er 3&. P0 2!. 23.3:3.000 d. 200 B a. P2&:. ND+9 recei#ed a di#idend of P&0!. Auestions4 .income of P030. /hich includes ra/ materials and /ork*in*process is on a perpetual $asis. P33. common stock for P& per share and reclassified the remainin% stock as noncurrent. 9n understatement of the physical in#entory $y P&0. 2. P0. On 5anuary &. 2he share in net income of <imultaneous to $e reco%nized $y ND+9 in its income statement for 200 should $e a.000 $. ND+9 sold &00.000 de$it c. @ou e. 200 B a.pense. O#erhead /as included at the rate of 200" of direct la$or. 2his amount /as char%ed to manufacturin% e. Direct la$or included in the in#entory amounted to P 00.000 c.000. P3.&30. first*out method. Durin% Decem$er. P30.000 c. 200'B a.&2!.000 shares of <imultaneous Corp.amination of the accounts and records of =uddy 8anufacturin% Company for the year ended Decem$er 3&. P3. 3. P2.000 H >ncludes direct la$or of P:''.

determine the follo/in%4 EDisre%ard ta. 2000.000 d.000 and <emitrucks P2!. P 3.300 d.000 220. 2he ra/ materials included in the endin% in#entory at Decem$er 3&. P :''. retirements. !'. 2he <emitrucks account consists of the follo/in% as of 5anuary &.000 3!. no salva e value'( )o char es have !een made a ainst the account !e"ore January 1. 03.2 .000 $. P 3. P00!. 2003 and Decem$er 3&.000. 3. Iam$an 8f%.0&3.& No. 2he carryin% amount of <emitrucks as of Decem$er 3&.000 $. P . Auestions4 =ased on the a$o#e and the result of your audit.!00 d.000 33. Iam$an 8f%.000 d.000 c.F 2ruck No. 2he total cost of sales for Decem$er 3&.tent that it /as sold as ?unk for P .300 $. P !0&. P &.000 d.:00 2:.3:0.:00 d.000 c.000 $depreciation on the % trucks "rom respective date o" purchase. P32. P 3.000 cash6 entry de$ited Cash and credited <emitrucks. P 3.&00. paid the automo$ile dealer P&!0. P&30.&. 2he 2003 net income is o#erstated $y a. P 2. implicationsF 32.000 The Semitrucks – Accumulated Depreciation account previously adjusted to January 1. P&'.!F.000 c.:00 c.000 cash on the transaction. 2he ad?usted amount of physical in#entory at No#em$er 30.200. 2002. 2003 is4 a. had a !alance on that date o" #302. &3.300 $. P233. P!03. P 03 . P0 33. P 3. 2003 5uly &. P&03. P!&. P!0. P 3.033.000 from the insurance company. P 2. 200'. inclusi#e. 2he 200' depreciation e.0 0.002. 2 /as not retired.000 . P 3. P3!3. 2003 is4 a. P 2. 2003( 2ransactions $et/een 5anuary &.&.:00 30.!00 Problem % @ou re)uested a depreciation schedule for <emitrucks of Iam$an 8anufacturin% Company sho/in% the additions.000 cash and /as char%ed at that amount to <emitrucks account. 2003 is4 a.2 No.!006 200'. 2000. and duly entered to the led er.000 c. cost 5uly.:00 c. E9ssume truck No. P 3.000.:'&. depreciation and other data affectin% the income of the Company in the 3*year period 2003 to 200'. and credits to 8iscellaneous >ncome. P3!. P 3. 2he direct la$or included in the endin% in#entory at Decem$er 3&. 2003 2ruck No. the a%reed purchase price of /hich /as P330. P 3.&. P&03. 200! 5uly &. P0 d.!:'.:00 c. 200! +ntries for depreciation had $een made for the close of each year as follo/s4 2003. & /as sold for P3!.300 d. P&!0. P20.000 d.02'.!00 $. 2he ad?usted amount of in#entory at Decem$er 3&. 2ruck No. Co.pense is a. 2he entry /as de$it to <emitrucks and a credit to cash. cost P&00.3 No. 5an. P2&&. P2 0. !ased on "ive&year li"e.0!3. P203.0006 200!. &. 200' is a.03&.3 purchased purchased purchased purchased 5an. 2003 is4 a.:00 $. 3 /as traded for lar%er one ENo.000 c.000 $.000 P :30. P 00. cost 5uly.0006 2003. P 3. Co.000.000 3&. P:. 20034 2ruck 2ruck 2ruck 2ruck No. cost 5an. and their record in the led%er /ere as follo/s4 5uly &. 2he entry made $y the $ookkeeper /as a de$it to cash. P 3.000 cash. P3&. 'F /as ac)uired for P3'0. 2003. 9 ne/ truck ENo.000.000 230.:00 20.000 c. 2he 2003 net income is understated $y a.&. recei#ed P2!.300 $.000 300. 2003 is4 a.000.000. 2002. P&30.000 $.3 /as dama%ed in a /reck to such an e. P203.

e.300 c.300 in the >nterest 1ecei#a$le account. P23. the $alances of the follo/in% three notes /ere4 a. 200! /ere confirmed4 a. On 7e$ruary 2:. 200! /as dishonored. the company accepted furniture and fi. Other $alances as of 5anuary &.000 in full settlement from 5efferson. O#er $y P23. 2he entry on the receipt of principal and interest due from 8acasarte note has a a.:'0 /as $een credited to the Notes 1ecei#a$le account.000 d. 200!. 3. $.000 principal plus accrued interest at '" each 9u%ust 3&. Noynay note is P30. 3:.!00 c. $. 2he ad?ustin% entry on the receipt of a post*dated check from 5eanina note a.000. De$it to notes recei#a$le at P3. P 3&. Under $y P23. recei#ed principal and interest on Noynay note amountin% to P32.pense account. Oli#er paid protest fee on note dishonored $y Noynay.000. Oli#er recei#ed a check dated 7e$ruary &. and due on <eptem$er &. De$it of P&. 2003. On the same date the said note has $een discounted $y a $ank at '". P 0. On No#em$er 3. recei#ed P2!. in settlement of 5eanina note.000 at '" interest dated Decem$er 3&. $ecause the note discounted on 7e$ruary 2:. c.03& and /as de$ited to the Note 1ecei#a$le account.!00 $. On No#em$er &. 9nalysis of the transactions for the year discloses the follo/in%4 a. On Decem$er 2 . 2he cash proceeds amountin% to P23.200. 200' and /hich has $een recorded as cash on hand on Decem$er 3&.000 $. c. 2he P! payment has $een de$ited to the Note 1ecei#a$le account. 200! from 5efferson /hose trade account /as past due. 2he 200! net income is understated $y a.!00 d. P 30. /hich has $een discounted $y a $ank to Oli#er Company at '" on No#em$er &. and paya$le in annual installments of P&0. /hich has $een recei#ed on 9u%ust 3&.000 $. 200!. and credited to the Note 1ecei#a$le account. 200!.'0! 30. 200'. 200!.300. Auestions4 3 .3'. 9s of 5anuary &. the company paid protest fee and maturity #alue of 5efferson note to the $ank. an accrued interest on 8acasarte note of P&. P'3. 2he amount has $een credited to the Note 1ecei#a$le account. 5eanina note is P0. $.000 d. P 30.&20 /as included in cash on hand on Decem$er 3&. 200!. P 3&. $. 2he check amountin% to P0. 2he account recei#a$le to $e reco%nized from 5eanina note from the receipt of a check dated 7e$ruary &.'00 d. P 0. a.00! c. h. 2he total cash paid $y the company is P2'. 200!. 2003. Credit of P300 in the Prepaid >nterest +. On <eptem$er 3. De$it to accounts recei#a$le for P0.'00 $. 2he account recei#a$le to $e reco%nized from Noynay note /hich has $een dishonored on <eptem$er 3 a. P33.000 3&.:'0 30.200. 8acasarte note is P 0. On Decem$er 3&. %.000. O#er $y P2!.33 . d. Credit to interest income at P&.aminin% the financial statements of Oli#er Company for the year ended Decem$er 3&. 2.000 '" note due Octo$er 2:. d. P:3. Credit to notes recei#a$le at P33. 2he effect on the Note 1ecei#a$le account for the discountin% of 5efferson note on 7e$ruary 2: a. f. On Decem$er 3&. P0 Problem & @ou are e. P 0.200 has $een de$ited to the Note 1ecei#a$le account. 2he said amount has $een credited to the Note 1ecei#a$le account. P 0.200 has $een credited to the Notes 1ecei#a$le account representin% the receipt of the principal and interest due from 8acasarte /hich is in accordance /ith a%reement includin% the t/o*year principal payments in ad#ance. De$it to interest recei#a$le at P2. On 9u%ust 30.:'0 c.tures /ith a fair market #alue of P23.000. Under $y P2!. c. . @ou analysis of the 200! Notes 1ecei#a$le account follo/s4 &. 2003 and /ill due on No#em$er &.

03& 33.hen usin% confirmation to pro#ide e#idence a$out the completeness assertion for accounts paya$le.00! c. $. 32. 1i%hts and o$li%ations d. >ncludin% a list of items or in#oices that constitute the account $alance. . +. c. Completeness 3:.penses recorded for the period /ith outstandin% de$t.istence or occurrence and a.amination*** .03&. -endors /ith /hom the entity has pre#iously done $usiness. O#er $y P2'. such as a financial institution. 1estrictin% the selection of accounts to $e confirmed to those customers /ith relati#ely lar%e $alances. Payees of checks dra/n in the mont h after the year end. 1i%hts and o$li%ations d. d. $. the appropriate population most likely /ould $e a. d. 9d?ustin% entry on the full settlement of Noynay note a. $. c.000 3'. Under $y P!&. d. >nspectin% the accounts paya$le su$sidiary led%er for unrecorded lon%*term de$t. Credit to notes recei#a$le for P&20. 9d?usted $alance of Notes 1ecei#a$le on Decem$er 3&. 9mounts recorded in the accounts paya$le su$sidiary led%er. c. 3 . De$it to accounts recei#a$le at P2'. that the a%ent is holdin% in#estment securities in the client(s name. d.03& d.000.00! $.istence of the holders of the de$t $y direct confirmation. c.amine lon%*term de$t most likely /ould include steps that re)uire a. d. De$it to allo/ance for dou$tful accounts at P2.300. Credit to unearned interest income for P300.03&. !0. -erifyin% the e. >n confirmin% /ith an outside a%ent. c. c. d.tures /ith a fair #alue of P23.istence c. $. Under $y P2!. or e*mail. Credit to notes recei#a$le at P32. Completeness $. $.33 . P !!. -aluation or allocation c. Notifyin% the recipient that second re)uests /ill $e mailed if they fail to respond in a timely manner. ***+nd Of +. .03&. P !&. Credit to notes recei#a$le at P2'. -aluation or allocation $.33 .$. 9n auditor most likely /ould re#ie/ an entity(s periodic accountin% for the numerical se)uence of shippin% documents and in#oices to support mana%ement(s financial statement assertion of a.'0!. 9d?ustin% entry for the full settlement of 5efferson note throu%h furniture and fi. Credit to notes recei#a$le at P23.000 d. 33.03& c. De$it to notes recei#a$le at P32. P &0.hich of the follo/in% strate%ies most likely could impro#e the response rate of the confirmation of accounts recei#a$leB a. P 30. O#er $y P!&. Credit to accounts recei#a$le at P32. 9n auditor(s pro%ram to e. Presentation and disclosure 30. 3!. an auditor most likely %athers e#idence in support of mana%ement(s financial statement assertions of e. >n#oices filed in the entity(s open in#oice file. 200! a. 2he effect on the note recei#a$le account after 5efferson note that has $een dishonored on 7e$ruary 2: /as dishonored a. De$it to accounts recei#a$le at P3&. Correlatin% interest e. Comparin% the carryin% amount of the de$t to its year*end market #alue. 1e)uestin% customers to respond to the confirmation re)uests directly to the auditor $y fa.000 a.000 $. De$it to notes recei#a$le for P0.33 .