Lakeside Auditing Essay
Following his discussion with Rogers, Andrews talked briefly with Carole Mitchell concerning the warehouse expansion. She indicated that Art Heyman had already prepared an analysis of the repairs and Maintenance account (see Exhibit 9-4). In addition, based on the debits to the Warehouse account (see Exhibit 9-5) he had located the invoices substantiating the capitalized transactions (see Exhibit 9-7) while reviewing the invoices received by Lakeside subsequent to the end of 2012.
Perform the necessary steps to test the warehouse account (#111-1) and document your procedures on an audit document similar to the one in Exhibit 9-4. Indicate and prepare on the audit document any proposed correcting entries that are …show more content…
> Traced to general ledger noting agreement.
# Traced to purchase invoice noting agreement as to amount, and approval.
Additional Audit Procedures:
Examined 09/01/2012 minutes of the Board of Directors’ meeting noting approval for expansion.
Examined bank confirmation indicating a lien on the warehouse in connection to a $100,000 loan.
Proposed Adjustment A- Roof repair incorrectly recorded in asset account.
AJE 1 640-1 Repair and Maintenance 3,500 111-1 Building-Warehouse/Office 3,500
Proposed Adjustment B- Invoice for December work completed by Heilman Construction received after year-end.
AJE 2 111-1 Building-Warehouse/Office 17,100 210-2 Accounts Payable 17,100
Proposed Adjustment C- Invoice for work-completed 12/28/12-01/08/13 by Gaines Electrical Co. received after year-end. (4 days of accrual: 4/12 x $4,800=$1,600).
AJE 3 111-1 Building-Warehouse/Office 1,600 210-2 Accounts Payable 1,600 Proposed Adjustment D- Capitalize interest on building loans.
($93,800 x .10 x 3/12 = $2,345)
AJE 4 111-1 Building-Warehouse/Office 2,345 220-1 Accrued Expenses Payable 2,345
Proposed Adjustment E- Warehouse Expansion not in service at