Reference no: EM133207354

In connection with your examination of the financial statements of Real Inc. for the year ended December 31, your post-balance sheet date audit procedures disclosed the following items:

1. January 7: The funds for a $52,000 loan to the corporation made by Recep Collins on May 18 were obtained by him with a loan on his personal life insurance policy. The loan was recorded in the account "Loan payable to officers." The source of the funds obtained by Real was not disclosed in the company records.

2. January 11: The mineral content of a shipment of ore en route on December 31 was determined to be 80 percent. The shipment was recorded at year end at an estimated content of 50 percent by a debit to "Raw material inventory" and a credit to "Accounts payable" in the amount of $41,250. The final liability to the vendor is based on the actual mineral content of the shipment.

3. January 31: As a result of reduced sales, production was curtailed in mid-January and some workers were laid off. On February 5, all the remaining workers went on strike. To date, the strike is unsettled.

4. February 21: A contract was signed whereby Kayato Enterprises purchased from Real Inc. all of its capital assets, inventories, and the right to conduct business under the name "Real Inc. Division." The transfer's effective date will be March 1. The sale price was $930,000.

Required 

Assume that the above items came to your attention prior to completion of your audit work on February 28. For each of the above items, discuss the disclosure that you would recommend for the item.