This preview has intentionally blurred sections. Sign up to view the full version.View Full Document
Unformatted text preview: Chapter 16 Homework 16-23 1. Detail tie-in 2. Detail tie-in 3. a.Existence b. Accuracy c. Realizable value (if cash receipts relate to older accounts) 4. a. Existence b. Accuracy 5. a. Existence b. Accuracy c. Realizable value (if cash receipts relate to older accounts) 6. Cutoff 7. Rights 8. Classification 16-27 a. Ordinarily, a shipment is considered a sale when it is shipped, picked up, or delivered by a common carrier. b. The sales invoice number can be ignored, except to determine the shipping document number. INVOICE NO. SHIPPING DOCUMENT NO. MISSTATEMENT IN SALES CUTOFF OVERSTATEMENT OR UNDERSTATEMENT OF AUG. 31 SALES August sales 4326 4329 4327 4328 4330 2164 2169 2165 2168 2166 none 1,914.30 none 620.22 none 2,534.52 overstatement overstatement September sales 4332 4331 4333 4335 4334 2163 2167 2170 2171 2172 4,641.31 106.39 none none none 4,747.70 understatement understatement Net understatement 2,213.18 Adjusting entry Accounts receivable Sales 2,213.18 2213.18 c. After making the type of cutoff adjustments shown in part b, current year sales would be overstated by: Amount of sale 2168 620.22 2169 1,914.30 2170 852.06 2171 1,250.50 2172 646.58 5,283.66 The best way to discover the misstatement is to be on hand on the balance sheet date and record in the audit working papers the last shipping document issued in the current period. Later, the auditors can examine shipping documents before and after the balance sheet date to determine if they were correctly dated. d. The following procedures are usually desirable to test for sales cutoff. 1. Be present during the physical count on the last day of the accounting period to determine the shipping document number for the last shipment made in the current year. Record that number in the working papers....
View Full Document
This note was uploaded on 03/18/2011 for the course ACCT 422 taught by Professor Smith during the Spring '11 term at UMBC.
- Spring '11