John Brown s auditing American Manufactharers, Inc long wm debt schedde as of Oc
ID: 2793584 • Letter: J
Question
John Brown s auditing American Manufactharers, Inc long wm debt schedde as of Ocdober 31, Year 7. This is John's 3rd year audting Amenican Manefactun For each tickmak presented, double-dlick on the associated cell and determine which audit procedue most Bhely was perfomed by Jotn Selections may only be used once Lender Interest Payment Tems Collateral Crrent Year Current Yearlalance nterest Pald Accrued Conments 1001Year 6 Borowings Reductions 1001/Year 7 Interest onPayable .First Natonal 10% 050,000 750M First National conliems that Iindenest paryments are 2025 Second State confinns that inst paymens a _a Borrowed adNonul$200,000 mClark on Interest only onlast day ofeach Maulating Bank curent and agrees with account balance arrent and agrees with accounit balance 11/S Year 7, need to investigate sebonowing jst guarder prindpal due in hul on emn 09 30/Year First mortgage on production facilities 0 (110.00) 270,000 n, 03Yr 7 Second State Bank 9% $10,000phopal plus interes. on the 1st of each month due in full on 0101/Year 10 A Clark majority stockholder Unsecured 299.000 . ater year end and consider impuled interest on s Tickmark Audit ProcedureExplanation / Answer
Ans:
The objectives of the audit of long term debt schedule are to ascertain the following:
1.Valid claims of banks and/or other parties involved.
2.All the entries relating to the loans have been accounted for in the books of accounts.
3.Correctness of liability at the end of each accounting period.
4.Classification of the liability as per accounting standards.
The auditing procedure involves comparing of loan account balances with previous years’ balance and to record the changes during the current period. It includes review of board approvals, lenders’ confirmation and correctness of interest expenses.
Accordingly, the most likely audit procedures performed by John for the given figures are as under in the same sequence of tick marks:
1.Agreed to loan agreement validated Bank.
2.Agreed to prior year’s audit documentation
3.Agreed interest rate, terms and collateral to note and loan agreement
4.Footed/ cross footed without exception
5.Agreed to canceled checks and/ or lenders’ monthly statements. Also agreed amount to loan agreement and/or board authorization.
6.Traced amount to current year’s trial balance and general ledger.
7.Confirmed, without exception
8.Tested reasonableness of calculation.
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.