chapter 5-arens-suggested solutions to problems and case

chapter 5-arens-suggested solutions to problems and case -...

Info icon This preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
5-19 Class of Transactions a. Financial Statement Balance b. Title of Journal c. Transaction Cycle Purchase Returns Purchase returns & allowances Acquisition or purchases Acquisition & payment Rental Revenue Rent revenue Revenue or sales history Sales & collection Charge-Off of Uncollectible Accounts Bad debts or allowance for doubtful accounts Adjustments Sales & collection Acquisitions of Goods and Services Repair and maintenance Acquisition or purchases Acquisition & payment Collection of GST GST payable Revenue or sales history Sales & collection Adjusting Entries Accrued payroll Adjustments Payroll & personnel Payroll Service & Payments Sales salaries Payroll Payroll & personnel Cash Disbursements Accounts payable Disbursements Acquisition & payment Cash Receipts Accounts receivable Cash receipts Sales & collection d. Rental revenue is likely to be recorded in the revenue journal (or revenue transaction file) using the sales at the time revenue is earned, perhaps the beginning of the month. It is likely to be recorded as a debit to accounts receivable (as well as debits to individual customer accounts in the accounts receivable transaction file and accounts receivable master file) and a credit to rental revenue. The journal (sales transactions) will be summarized periodically and posted to the general ledger. How frequently this occurs depends upon the nature of the business – some businesses have immediate (online) sales posting, while others may have daily, weekly or monthly postings. There will be required adjusting entries for unearned rent and for rent receivable. A record will be kept of each renter and a determination made whether rent is unpaid or unearned at the end of each accounting period. Reversing entries may be used to eliminate the adjusting entries. 5-22 Specific Balance-related Audit Objective Management Assertion a. There are no unrecorded receivables. 2. Completeness b. Receivables have not been sold or discounted. 1. Existence or occurrence c. Uncollectible accounts have been provided for. 3. Measurement d. Receivables that have become uncollectible have been written off. 1. Existence or occurrence e. All accounts on the list are expected to be collected within one year. 3. Measurement f. All accounts on the list arose from the normal course of business and are not due from related parties. 3. Measurement g.. Sales cutoff at year end is proper. 4. Allocation
Image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
5-23 a. Assertions are implied or expressed representations by management about the components of financial statements. These assertions are the same for every account balance. General audit objectives are essentially the same as management assertions, but they are expanded somewhat to help the auditor decide which audit evidence is necessary to satisfy the management assertions. Valuation, classification, posting and summarization, and mechanical accuracy are a subset of the measurement assertion. Specific audit objectives are determined by
Image of page 2
Image of page 3
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern