What actions should heather take

Assignment Help Accounting Basics
Reference no: EM132720481

Question - Cash in Hand/ Revenue Recognition - In addition to the usual mix of compilation, review, and audit clients for which Heather Hunt serves as a senior in a small office of a regional firm, she has been assigned a new client that recently engaged the firm. Fashion First, an incorporated retail outlet, is a thriving local store. The business is run by a single owner/manager, "Buzz" Thompson, who makes all major decisions. The business has not previously used the services of a CPA firm. In addition to the preparation of financial statements, the CPA firm will handle tax returns for the business. At her first visit to the client's office, Heather is introduced to Sandy, the part-time bookkeeper who is also a full-time accounting student at the local university. At a subsequent meeting, Sandy confides to Heather that she found the job at the beginning of the semester after an extensive search. Sandy really needs the money to help finance her education and feels lucky to have found a good-paying job during the current economic downturn. Feeling that Heather is someone she can talk to and get advice from, Sandy describes a situation that has been on her mind for some time now. Sandy's concern relates to the handling of sales revenues. When money from sales revenues are counted and deposited on a weekly basis, a chart is filled out with categories carefully delineating the type of payment: cash, checks, American Express, or Visa/Mastercard. Sandy's employer, after depositing the weekly total, brings this chart back with his own written-in total of the actual amount deposited. After looking over some of these weekly deposit chats, Sandy noticed that $500 cash was missing from each deposit. After a more thorough inspection of monthly tax documents that "Buzz" Thompson has filled out, Sandy noticed that the reported monthly gross revenue was $2,000 less than what had been actually counted. The employer is the only person handling the money after it has been counted. He is also the only one to deposit the money. When Sandy asked Mr. Thompson about revenue not being reported for tax purposes, he assured her that every dollar of income was reported on the tax forms. Furthermore, "Buzz" asserted, since Sandy wasn't the person who signed the forms, she shouldn't be concerned.

Answer the following-

1. What actions should Heather take? What alternatives would you choose if you were in this situation? Why?

2. Should the actions differ depending on whether the engagement is for a compilation or for a review?

Reference no: EM132720481

Questions Cloud

Find the mean and standard deviation of heights : Of a large group of men, 5% are less than 60 inches in height and 40% are between 60 & 65 inches. Find the mean and standard deviation of heights
Compute the net tax payable or refund due for tim : Total itemized deductions (not including any potential deductions above) 27,900. Compute the 2019 net tax payable or refund due for Tim and Sarah Lawrence
Limitations of blockchain and emerging concepts : Blockchain continues to be deployed into various businesses and industries. However, Blockchain is not without its problems.
Explain the potential impact on the financial statements : Cook's Furniture Ltd has purchased a property in Adelaide Australia on 20 July 2020 for AUD 3,200,000. Explain the potential impact on the financial statements
What actions should heather take : Cash in Hand/ Revenue Recognition - What actions should Heather take? What alternatives would you choose if you were in this situation
Organisational behaviour : Emotional intelligence is important in influencing an individual's success.' Do you agree or disagree with this statement?
How much reliance would you place on the results : How much reliance would you place on the results from your analytical procedures? Include in your answer appropriate justifications
Find the rate per page to be charged by the ISF : Find the rate per page to be charged by the ISF, based on the following factors: Printing equipment - estimated to cost $300,000 and to have an average life
What should be balance in accounts receivable at December : What should be the balance in accounts receivable at December 31, 2020, before subtracting the allowance for doubtful accounts

Reviews

Write a Review

Accounting Basics Questions & Answers

  Define farmers and equipment repair companies in the dakftas

Do any analysis you consider appropriate to determine if the explanation by management seems reasonable

  During 2012 and 2013 supplies inc drove the truck 15000 and

during 2012 and 2013 supplies inc. drove the truck 15000 and 22000 miles respectively to deliver merchandise to its

  Net receivables to cover sales discounts

Quick Finance assessed a finance charge of 6% of the total accounts receivable factored and retained an amount equal to 2% of the total receivables to cover sales discounts.

  Inventory substantive testing

Inventory substantive testing

  Calculate the amount of the year-end adjusting entry

Calculate the amount of the year-end adjusting entry for bad debts expense. Bad debt expense is estimated to be 3% of credit sales for the year

  Journalize the entries required on february

Amortization by straight-line method of bond premium on December

  Discuss manufacturing overhead and finished goods

How are those indexes related to direct materials, direct labor, manufacturing overhead and finished goods

  For dye company at a sales level of 5000 units sales is

for dye company at a sales level of 5000 units sales is 75000 variable expenses total 40000 and fixed expenses are

  Northwest airlines applied mathematical models to find out

northwest airlines applied mathematical models to determine which customers in its database were currently responsible

  Compute the depreciation for each year

Speedy Taxi Service uses the units-of-activity method in computing depreciation on its taxicabs. Each cab is expected to be driven 150,000 miles.

  Record all the necessary entries in the relevant journals

Record all the necessary entries in the relevant journals and ledgers, excluding balance day adjustments, to maintain proper accounting records for June

  Discuss maggie grimes case study

Based on case study Maggie Grimes below and using the research for assignment for Life Skills

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd