Attached are the pages for IAPC Assignment 6. In her lecture, we are only required to do Option A, so I did not include Options
Attached are the pages for IAPC Assignment 6. In her lecture, we are only required to do Option A, so I did not include Options B & C in here. The actual assignment starts on page 6 of the Word doc. Extra workpapers for part b starts on page 12.
wp 21-1
| Oceanview Marine Company | ||||||||||||
| Accounts Receivable Leadsheet | ||||||||||||
| December 31, 2018 | ||||||||||||
| 2018 | % Change | |||||||||||
| 2017 | 2018 | Net | Adjusted | (before | ||||||||
| Account Number and Name | Balance | Balance | Adjustments | Balance | adjustment) | |||||||
| 1100 — Accounts receivable | 1,402,229 | PY | 1,762,682 | G/L | 25.71% | |||||||
| 1110 — Allowance for doubtful accounts | (116,636) | PY | (116,636) | G/L | (31,706) | (148,342) | 21-15 | 0.00% | ||||
| Total | 1,285,593 | 1,646,046 | 28.04% | |||||||||
| F | F | |||||||||||
| Tickmark legend | ||||||||||||
| GL Agreed to general ledger. | ||||||||||||
| PY Agreed to prior year working papers. | ||||||||||||
| F Footed with out exception. |
21-1
wp 21-2
| Oceanview Marine Company | ||||||
| Adjusting Journal Entries: Accounts Receivable | ||||||
| December 31, 2018 | ||||||
| Account Number and Name | Debit | Credit | ||||
| 6100 — Bad debts expense | $ 31,706.00 | |||||
| 1110 — Allowance for bad debts | X | $ 31,706.00 | ||||
| Explanation: To adjust allowance account to estimated balance at year-end. See wp 21-15. | ||||||
| X – Posted to leadsheet |
21-2
wp 21-6
| Oceanview Marine Company | |||||||
| Planned Tests of Balances Matrix – Accounts Receivable | |||||||
| December 31, 2018 | |||||||
| Audit Objectives | Acceptable Audit Risk (High, Medium or Low) | Inherent Risk (High, Medium, or Low) | Analytical Procedures (High, Medium, or Low potential for misstmts.) | Control Risk: Sales Cycle (High, Medium, or Low) | Substantive Tests of Transactions: Sales Cycle (High, Medium, or Low likelihood of misstmts.) | Planned Tests of Balances (Extensive, Medium, or Reduced Tests) | Comments * |
| Detail tie-in | M | L | L | L | L | R | |
| Existence | M | M | L | M | L | M | Consideration of required fraud risk of improper revenue recognition . |
| Completeness | M | M | L | L | L | M | Incentive for private company to understate revenue. |
| Accuracy | M | M | M | L | L | ||
| Classification | M | L | L | H | L | ||
| Realizable value | M | M | M | M | L | ||
| Cutoff | M | M | M | L | L | ||
| Rights | M | M | M | L | L | ||
| Presentation and disclosure | M | L | L | L | L | ||
| Preliminary judgment about materiality: | $75,000 | ||||||
| Performance materiality for accounts receivable: | $40,000 | ||||||
| * For each audit objective with extensive or medium planned tests of balances (E or M in column seven), use column eight to indicate your primary concern(s) about that objective. |
21-6
wp 21-6 resp
| H | E |
| M | M |
| L | R |
wp 21-17
| Oceanview Marine Company | ||
| Calculation of Sample Size: | ||
| Nonstatistical Sampling | ||
| December 31, 2018 | ||
| Decisions and Facts for Determining Sample Size: | ||
| Book Value of the recorded population: | 1,762,682.00 | (86 accounts) |
| Book value of individually material accounts: | 1,166,116.00 | (13 accounts) |
| (test all material accounts) | ||
| Book value of all remaining accounts (BV): | ||
| (test only a sample) | ||
| Tolerable Misstatement (TM): | ||
| Confidence Factor (CF): | 2.0 | (from table below) |
| n = (sample size accounts < tolerable misstatement): | ERROR:#DIV/0! | (round to whole number) |
| Note: n = (BV x CF) / TM | ||
| Confidence Factor for Determining Sample Size: | ||
| Risk of Incorrect Acceptance | Confidence of Sample | Confidence Factor |
| 37% | 63% | 1 |
| 14% | 86% | 2 |
| 5% | 95% | 3 |
| Justify/explain your decision: | ||
| Other factors considered: |
Current file 3 – tests of balances, completing the audit
(The confidence factor should be based on considerations of acceptable audit risk, inherent risk, control risk, results of preliminary analytical procedures, and the results of substantive tests of transactions)
Inherent risks for the existence and accuracy objectives for accounts receivable were assessed as medium. After performing tests of transactions for the sales and cash receipts cycle, control risks for the existence and accuracy objectives for accounts receivable were assessed as medium and low, respectively. Acceptable audit risk is medium. Results of substantive tests of transactions and analytical procedures were generally favorable. A confidence factor of 2 is considered appropriate considering these factors.
Little anticipated misstatement in accounts receivable.
21-17
wp 21-18
| Oceanview Marine Company | |||
| Sample Selection: Nonstatistical Sampling | |||
| December 31, 2018 | |||
| Audit Area: Accounts receivable | |||
| Individually materal accounts greater than tolerable misstatement of: | 0 | ||
| Amount | |||
| Customer Name | Confirmed | ||
| 1 | Anthony Underwriters | 117,990.00 | |
| 2 | |||
| 3 | |||
| 4 | |||
| 5 | |||
| 6 to 13 | Various | 588,421.00 | |
| Total | 706,411.00 | ||
| Sample below tolerable misstatement: | |||
| Sampling Interval = Number of Accounts / Sample Size = | |||
| (round to whole number) | |||
| Amount | |||
| Customer Name (Random Starting Point: 1st account) | Confirmed | ||
| 1 | James Abbott | 21,345.00 | |
| 2 | |||
| 3 | |||
| 4 | |||
| 5 | |||
| 6 to 35 | Various | 232,002.42 | |
| Total | 253,347.42 | ||
Current file 3 – tests of balances, completing the audit
21-18
wp 21-19
| Oceanview Marine Company | ||||||||||
| Evaluation of A/R Confirmations: | ||||||||||
| Nonstatistical Sampling | ||||||||||
| December 31, 2018 | ||||||||||
| Customer amounts greater than tolerable misstatement—Summary of Confirmation Differences: | ||||||||||
| Amount of | ||||||||||
| A/R Balance | A/R Balance | Amount | Reason(s) | Client Misstatement, | ||||||
| Customer | per Client's | per | of | for | if any | |||||
| Name | Records | Customer | Difference | Difference | Over (Under) | |||||
| 0.00 | ||||||||||
| 0.00 | ||||||||||
| 0.00 | ||||||||||
| 0.00 | ||||||||||
| Net misstatement: | 0.00 | |||||||||
| Sample items less than tolerable misstatement—Summary of Confirmation Differences: | Amount of | |||||||||
| A/R Balance | A/R Balance | Amount | Reason(s) | Client Misstatement, | ||||||
| Customer | per Client's | per | of | for | if any | |||||
| Name | Records | Customer | Difference | Difference | Over (Under) | |||||
| 0.00 | ||||||||||
| 0.00 | ||||||||||
| 0.00 | ||||||||||
| 0.00 | ||||||||||
| Net misstatement: | 0.00 | |||||||||
Current file 3 – tests of balances, completing the audit
21-19
wp 21-20
| Oceanview Marine Company | |
| Evaluation of A/R Confirmations: | |
| Nonstatistical Sampling (continued) | |
| December 31, 2018 | |
| Calculation of Projected Misstatement: | |
| Misstatements in individually significant accounts: | |
| Net misstatement = | 0.00 |
| (misstatements are not projected since tested 100%) | |
| Sample Projected Misstatement: | |
| (net misstatement/$ sample size) x ($ population size*) = | 0.00 |
| Total projected misstatement = | 0.00 |
| * The population size for projection is the book value of the accounts less than tolerable misstatement. | |
| Calculation of Actual Allowance for Sampling Risk: | |
| Tolerable misstatement = | 0.00 |
| Less: Projected misstatement = | 0.00 |
| Allowance for sampling risk = | 0.00 |
Current file 3 – tests of balances, completing the audit
21-20
wp 21-21
| Oceanview Marine Company | ||
| Evaluation of A/R Confirmations: | ||
| Nonstatistical Sampling (continued) | ||
| December 31, 2018 | ||
| Decision (check one): | ||
| Accept population as stated. | ||
| Request client to adjust population. | ||
| Expand audit tests. | ||
| Some other action. Specify: | ||
| Explain/justify your decision: | ||
| Conclusion: | ||
| Calculation of Unadjusted Projected Misstatement: | ||
| Projected misstatement = | 0.00 | |
| Less: Any adjusting journal entry (net) = | ||
| Unadjusted projected misstatement = | ||
| (if greater than the audit misstatement posting threshold, carry forward to Summary of Uncorrected Misstatements (workpaper 90-1)) |
&"Times New Roman,Regular"&11Current file 3 – tests of balances, completing the audit
21-21
(Account is not fairly stated, but if client corrects misstatements found in sample, account will be acceptable.)
(No adjustment required for account to be fairly stated.)
(Account is not fairly stated, and cannot be made acceptable by correcting misstatements found in sample.)
AR Listing
| Oceanview Marine Company | |||||||
| Accounts Receivable Listing | |||||||
| December 31, 2018 | PBC | ||||||
| Amounts > $40,000 | |||||||
| 0-30 | 31-60 | 61-90 | 91-120 | ||||
| Customer Name | days | days | days | days | Total | ||
| Anthony Underwriters | 0.00 | 117,990.00 | 0.00 | 0.00 | 117,990.00 | S | |
| Bischoff, John | 0.00 | 113,655.00 | 0.00 | 0.00 | 113,655.00 | S | |
| Borst, Robert | 155,690.00 | 0.00 | 0.00 | 0.00 | 155,690.00 | S | |
| Devine, Dan | 121,456.00 | 0.00 | 0.00 | 0.00 | 121,456.00 | S | |
| Geyer, Robert | 0.00 | 68,904.00 | 0.00 | 0.00 | 68,904.00 | S | |
| Hayes, Lisa | 45,990.00 | 0.00 | 0.00 | 0.00 | 45,990.00 | S | |
| Kelsey, Martin | 123,568.00 | 0.00 | 0.00 | 0.00 | 123,568.00 | S | |
| Laubauch, Ken | 45,076.00 | 0.00 | 0.00 | 0.00 | 45,076.00 | S | |
| Smith, Linda | 47,665.00 | 0.00 | 0.00 | 0.00 | 47,665.00 | S | |
| Southern Construction | 0.00 | 0.00 | 190,890.00 | 0.00 | 190,890.00 | S | |
| Swain, Monte | 0.00 | 46,895.00 | 0.00 | 0.00 | 46,895.00 | S | |
| Sykora, Larry | 0.00 | 41,567.00 | 0.00 | 0.00 | 41,567.00 | S | |
| Underwood, John | 0.00 | 0.00 | 46,770.00 | 0.00 | 46,770.00 | S | |
| Total belwo $40,000 | 539,445.00 | 389,011.00 | 237,660.00 | 0.00 | 1,166,116.00 | ||
| F | F | F | F | F, CF | |||
| Cumulative | |||||||
| Amounts <$40,000 | Total | ||||||
| Abbot, James | 0.00 | 21,345.00 | 0.00 | 0.00 | 21,345.00 | 21,345.00 | |
| Adams, Don | 0.00 | 0.00 | 0.00 | 259.45 | 259.45 | 21,604.45 | |
| Allen, Robert | 432.00 | 0.00 | 0.00 | 0.00 | 432.00 | 22,036.45 | |
| Anderson, Matt | 235.67 | 134.76 | 125.32 | 0.00 | 495.75 | 22,532.20 | |
| Bates, Mary | 127.86 | 213.00 | 0.00 | 0.00 | 340.86 | S | 22,873.06 |
| Beatty, Lonnie | 21,390.00 | 0.00 | 0.00 | 0.00 | 21,390.00 | 44,263.06 | |
| Benson Realty | 113.87 | 0.00 | 0.00 | 0.00 | 113.87 | 44,376.93 | |
| Binkowski, Alex | 654.00 | 238.31 | 456.71 | 0.00 | 1,349.02 | 45,725.95 | |
| Capicchioni, Rita | 432.74 | 246.87 | 0.00 | 0.00 | 679.61 | 46,405.56 | |
| Chappelle, Daniel | 0.00 | 24,678.00 | 0.00 | 0.00 | 24,678.00 | 71,083.56 | |
| Chiang, Alpha | 21,345.00 | 0.00 | 0.00 | 0.00 | 21,345.00 | 92,428.56 | |
| Coscarelli, Stephen | 0.00 | 0.00 | 0.00 | 145.56 | 145.56 | 92,574.12 | |
| DeLuca, Frank | 22,458.00 | 0.00 | 0.00 | 0.00 | 22,458.00 | 115,032.12 | |
| Detzler, Richard | 0.00 | 0.00 | 0.00 | 1,145.00 | 1,145.00 | 116,177.12 | |
| Dugar, Amitabh | 245.68 | 123.65 | 0.00 | 0.00 | 369.33 | S | 116,546.45 |
| Elder, Robert | 476.89 | 367.90 | 543.00 | 0.00 | 1,387.79 | 117,934.24 | |
| Elliott, David | 345.76 | 247.69 | 0.00 | 0.00 | 593.45 | 118,527.69 | |
| Erlinger, Eric | 4,567.00 | 0.00 | 0.00 | 0.00 | 4,567.00 | 123,094.69 | |
| Escobar, Susan | 0.00 | 11,567.00 | 0.00 | 0.00 | 11,567.00 | 134,661.69 | |
| Finney, Robert | 0.00 | 0.00 | 0.00 | 22,154.75 | 22,154.75 | 156,816.44 | |
| Franklin, James | 21,367.00 | 0.00 | 0.00 | 0.00 | 21,367.00 | 178,183.44 | |
| Totals this page | 94,191.47 | 59,162.18 | 1,125.03 | 23,704.76 | 178,183.44 | ||
| Oceanview Marine Company | |||||||
| Accounts Receivable Listing | |||||||
| December 31, 2018 | PBC | ||||||
| 0-30 | 31-60 | 61-90 | 91-120 | Cumulative | |||
| Customer Name | days | days | days | days | Total | Total | |
| Totals from prior page | 94,191.47 | 59,162.18 | 1,125.03 | 23,704.76 | 178,183.44 | 178,183.44 | |
| Gibson, Marion | 0.00 | 8,900.00 | 0.00 | 0.00 | 8,900.00 | 187,083.44 | |
| Groomer, Michael | 23,567.00 | 0.00 | 0.00 | 0.00 | 23,567.00 | 210,650.44 | |
| Hansen, Karen | 213.45 | 324.65 | 119.11 | 0.00 | 657.21 | 211,307.65 | |
| Hill, Leonard | 0.00 | 0.00 | 0.00 | 348.21 | 348.21 | S | 211,655.86 |
| Howard, Richard | 0.00 | 11,678.00 | 0.00 | 0.00 | 11,678.00 | 223,333.86 | |
| J & S Research | 654.97 | 0.00 | 0.00 | 0.00 | 654.97 | 223,988.83 | |
| Jenkins, Frank | 0.00 | 0.00 | 0.00 | 21,680.00 | 21,680.00 | 245,668.83 | |
| Jennings, Rocky | 0.00 | 31,676.00 | 0.00 | 0.00 | 31,676.00 | 277,344.83 | |
| Jensen, Deborah | 25,456.00 | 0.00 | 0.00 | 0.00 | 25,456.00 | 302,800.83 | |
| Kattelus, Sue | 345.00 | 368.00 | 239.00 | 114.65 | 1,066.65 | 303,867.48 | |
| Kessler, Henry | 0.00 | 0.00 | 23,645.00 | 0.00 | 23,645.00 | 327,512.48 | |
| Klaver, Earl | 766.34 | 654.78 | 324.65 | 0.00 | 1,745.77 | 329,258.25 | |
| Klinger, Max | 11,960.00 | 0.00 | 0.00 | 0.00 | 11,960.00 | 341,218.25 | |
| Kubczak, Antoni | 345.67 | 213.45 | 11.64 | 0.00 | 570.76 | S | 341,789.01 |
| LaFave, Laura | 0.00 | 0.00 | 0.00 | 214.68 | 214.68 | 342,003.69 | |
| LaLonde, Jennifer | 0.00 | 0.00 | 0.00 | 8,965.00 | 8,965.00 | 350,968.69 | |
| Lantis, William | 214.67 | 356.94 | 158.90 | 325.76 | 1,056.27 | 352,024.96 | |
| Larson, Debra | 114.67 | 219.43 | 0.00 | 0.00 | 334.10 | 352,359.06 | |
| Lee, Yang | 116.45 | 235.89 | 0.00 | 0.00 | 352.34 | 352,711.40 | |
| Little, Donna | 432.11 | 325.67 | 0.00 | 0.00 | 757.78 | 353,469.18 | |
| Marsh, Max | 318.27 | 0.00 | 0.00 | 0.00 | 318.27 | 353,787.45 | |
| Maurer, Stephen | 0.00 | 0.00 | 0.00 | 643.34 | 643.34 | 354,430.79 | |
| McCabe, Terry | 21,643.00 | 0.00 | 0.00 | 0.00 | 21,643.00 | 376,073.79 | |
| McCall, Joseph | 5,865.00 | 0.00 | 0.00 | 0.00 | 5,865.00 | S | 381,938.79 |
| Mechem, William | 0.00 | 0.00 | 6,590.00 | 0.00 | 6,590.00 | 388,528.79 | |
| Meier, Diane | 0.00 | 21,456.90 | 0.00 | 0.00 | 21,456.90 | 409,985.69 | |
| Melbourne Corp. | 235.00 | 134.68 | 437.00 | 0.00 | 806.68 | 410,792.37 | |
| Murphy, James | 0.00 | 0.00 | 0.00 | 1,145.00 | 1,145.00 | 411,937.37 | |
| Nash, Dean | 0.00 | 0.00 | 0.00 | 3,567.90 | 3,567.90 | 415,505.27 | |
| O'Connell, Daniel | 456.90 | 532.00 | 219.05 | 0.00 | 1,207.95 | 416,713.22 | |
| Olin, Barry | 0.00 | 0.00 | 21,397.00 | 0.00 | 21,397.00 | 438,110.22 | |
| Peiffer, Jerrold | 0.00 | 4,595.00 | 0.00 | 0.00 | 4,595.00 | 442,705.22 | |
| Totals this page | 186,895.97 | 140,833.57 | 54,266.38 | 60,709.30 | 442,705.22 | ||
| Oceanview Marine Company | |||||||
| Accounts Receivable Listing | |||||||
| December 31, 2018 | PBC | ||||||
| 0-30 | 31-60 | 61-90 | 91-120 | Cumulative | |||
| Customer Name | days | days | days | days | Total | Total | |
| Totals from prior page | 186,895.97 | 140,833.57 | 54,266.38 | 60,709.30 | 442,705.22 | 442,705.22 | |
| Peoples, Jacquelyn | 18,654.00 | 0.00 | 0.00 | 0.00 | 18,654.00 | 461,359.22 | |
| Perkins, Terry | 22,456.00 | 0.00 | 0.00 | 0.00 | 22,456.00 | S | 483,815.22 |
| Ramirez, Ramon | 1,124.75 | 234.79 | 0.00 | 0.00 | 1,359.54 | 485,174.76 | |
| Ramsey, James | 0.00 | 2,145.00 | 0.00 | 0.00 | 2,145.00 | 487,319.76 | |
| Raymer, Lester | 0.00 | 0.00 | 2,246.47 | 0.00 | 2,246.47 | 489,566.23 | |
| Rose, Anna | 2,145.67 | 1,158.49 | 2,145.78 | 0.00 | 5,449.94 | 495,016.17 | |
| Ryan, Bernard | 21,456.00 | 0.00 | 0.00 | 0.00 | 21,456.00 | 516,472.17 | |
| Savalli, Karen | 556.24 | 346.78 | 0.00 | 0.00 | 903.02 | 517,375.19 | |
| Schmidt, Peter | 134.65 | 334.61 | 0.00 | 0.00 | 469.26 | 517,844.45 | |
| Schroeder, Bruce | 0.00 | 867.00 | 0.00 | 0.00 | 867.00 | 518,711.45 | |
| Simmons, Carol | 0.00 | 13,687.00 | 0.00 | 0.00 | 13,687.00 | S | 532,398.45 |
| Spanos, Jim | 5,698.00 | 0.00 | 0.00 | 0.00 | 5,698.00 | 538,096.45 | |
| Steinbart, Paul | 0.00 | 0.00 | 0.00 | 13,654.00 | 13,654.00 | 551,750.45 | |
| Taylor, Denzil | 0.00 | 11,321.00 | 0.00 | 0.00 | 11,321.00 | 563,071.45 | |
| Trotter, David | 21,456.00 | 0.00 | 0.00 | 0.00 | 21,456.00 | 584,527.45 | |
| Tuttle, Tom | 154.65 | 214.60 | 124.60 | 369.40 | 863.25 | 585,390.70 | |
| Warner, Wendy | 356.90 | 213.92 | 0.00 | 0.00 | 570.82 | 585,961.52 | |
| Wilcox, Laura | 6,890.00 | 0.00 | 0.00 | 0.00 | 6,890.00 | 592,851.52 | |
| Young, Gregory | 0.00 | 0.00 | 0.00 | 1,124.00 | 1,124.00 | 593,975.52 | |
| Zelli, Arthur | 0.00 | 2,590.48 | 0.00 | 0.00 | 2,590.48 | 596,566.00 | |
| TOTAL < $40,000 | 287,978.83 | 173,947.24 | 58,783.23 | 75,856.70 | 596,566.00 | ||
| F | F | F | F | F, CF | |||
| TOTAL > $40,000 | 539,445.00 | 389,011.00 | 237,660.00 | 0.00 | 1,166,116.00 | ||
| TOTAL ACCTS RECEIVABLE | 827,423.83 | 562,958.24 | 296,443.23 | 75,856.70 | 1,762,682.00 | G/L | |
| F | F | F | F | F, CF | |||
| 21-15 | 21-15 | 21-15 | 21-15 | ||||
| Tickmark Legend | |||||||
| F = Footed without exception. | |||||||
| CF = Cross-footed without exception. | |||||||
| G/L =Agreed to general ledger without exception. | |||||||
| S = Agreed to A/R subsidiary records without exception. Selected all over $40,000. | |||||||
| For amounts below $40,000, began with 5th account; selected every 10th account thereafter. |
Current file 3 – tests of balances, completing the audit
BC 2/05/2019
21-7
BC 2/05/2019
21-8
BC 2/05/2019
21-9
,
Oceanview Marine Company 21-3 Audit Program — Accounts Receivable
December 31, 2018
AUDIT PROCEDURES * W/P INIT COMMENTS
MODIFICATIONS TO AUDIT PROGRAM
1. Based on the results of previous audit procedures, complete the Planned Tests of Balances Matrix for accounts receivables and, if necessary, make appropriate modifications to this audit program.
No modifications of audit program deemed necessary.
TESTS OF BALANCES
2. Obtain an aged listing of accounts receivable as of year-end and:
(a) fo
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