Reference no: EM132998179
The audit staff of Adams, Barnes, & Co (ABC), CPAs reported the following audit findings in their 20X5 audit of Keystone Computers and Networks (KCN), Inc.
1. Unrecorded liabilities in the amount of $6440 for purchase of inventory. These inventory items were counted and included in the year end total
2. Projected misstatement from confirmation of accounts receivable in the amount of $2042 understatement
3. Projected misstatements from price tests of inventory of $9510
4. The staff of ABC believes that the amount of KCN's allowance for uncollectable accounts should be increased by $5000
In addition the audit staff has decided that for evaluating a material misstatement of the financial statements, the following guidelines should be used:
current assets- $50,000
Noncurrent assets-$75,000
Current Liabilities- $50,000
Noncurrent liabilities- $75,000
Net income before taxes-$65000
Problem 1: Create a schedule and find the:
- Total unreconciled balance
- Tax effect at 25%
- After tax effect
- Prior year misstatements
- After tax prior year effects
- Percent of unreconciled to f.s.