What type of subsequent event is death of board treasurer

Assignment Help Financial Accounting

Reference no: EM13824159

BACKGROUND:

A subsequent event refers to an event that occurs after the date of the audited balance sheet but prior to the date of the auditors' report. Subsequent events can be divided into two broad categories. The first are those that provide additional evidence about facts that existed either on or before the balance sheet date (Type I events). The second are those that involve facts that came into existence after the balance sheet date (Type II events). Type I events require adjustment to the financial statements while Type II events only require financial statement disclosure.

Dillon & Company, CPAs, are auditing the financial statements of PDQ Manufacturing as of December 31, 2009. During the fieldwork of its audit (March 2010), the auditors noted the following situations: A major customer who owed PDQ $10,000 in accounts receivable (a material amount) filed for Chapter 7 bankruptcy. A warehouse where the customer stored some of its inventory for resale had a fire. Estimated damage could not yet be quantified. In addition, the company's board treasurer was killed in a tragic plane crash. Dillon & Company is now ready to issue its audit opinion.

1. What should Dillon & Company, CPAs, do as a result of the customer bankruptcy?

2. What type of subsequent event is the death of the board treasurer?

3. Does the death of the board treasurer require an adjustment to the 12/31/09 financial statements?

4. What should Dillon & Company, CPAs, do to adjust the financial statements for the fire in the warehouse?

Reference no: EM13824159

Questions Cloud

Business is organized as sole proprietor ship : Prepare the journal entries to record the above events in the accounts of S&X. Prepare the closing entries for the month of November. Assume that after closing all of the revenue and expense accounts, the Income Summary account has a balance of $5,00..

Educational administration homework : Educational Administration Homework

Action research proposal : Action Research Proposal

What are the potential benefits-costs and ethical concerns : You are the plant manager. You have recently implemented a bonus system for your employees that provide a 10% bonus for favorable variances. What are the potential benefits, costs, and ethical concerns of such a bonus system?

What type of subsequent event is death of board treasurer : A subsequent event refers to an event that occurs after the date of the audited balance sheet but prior to the date of the auditors' report. Subsequent events can be divided into two broad categories. What type of subsequent event is the death of the..

Calculation of variable cost per uniti : The problem belongs to Basic Accounting and it discusses on calculation of variable cost per unit

Udl or cast instructional plan analysis : UDL or CAST Instructional Plan Analysis

Events and transactions-journalize transactions in journal : Beverly Crusher is a licensed CPA. During the first month of operations of her business (a sole proprietorship), the following events and transactions occurred. April 2 Invested $32,150 cash and equipment valued at $15,060 in the business. 2 Hired a ..

Data scales-probability : A marketing agency is interested in the buying habits of those who shop online versus those who shop in person. In your discussion post, address each of the following and explain your reasoning as to why you picked the specific scale:

User Account

All Pages