Assignment #7 Notes Payable and Accrued Interest Required Exercises 1. Audit Program for Notes Payable and Accrued Interest A P-6 Peach Blossom Cologne Company Audit Program Notes Payable and Accrued Interest Existence or Occurrence; Completeness; Rights and Obligations 1. Prepare or obtain schedule of notes payable for the year indicating beginning balances, payments, additions, and ending balances. 2. Examine copies of notes originating during the period or any other related loan agreements vouching data on each note as to payee, original date, original amount, due date, interest rates, collateral, etc. 3. Confirm outstanding balances and all details of each note with the holder of the note. 4. Vouch payments of and additions to notes payable. Completeness 5. Examine cancelled notes for items renewed or paid off during the year. 6. Examine bank confirmations for unrecorded notes payable. Valuation or Allocation 7. Determine clerical accuracy of schedule obtained in step # 1, agreeing beginning balances to prior year working papers and tracing ending balances to trial balance. 8.
Peach Blossom Cologne Company TB-BS Working Trial Balance-Balance Sheet 2-5-10 12-31-09 AOW ========================================================================================================================== Working Per Per Per Reclassification Financial Paper Audit Books Adjustments Audit Items Statements Reference 12-31-08 12-31-09 Debit Credit 12-31-09 Debit Credit 12-31-09 ========================================================================================================================== Assets: 101 Cash-Big City National Bank A-1 339415 420678 420678 420678 105 Accounts receivable B-1 124021 235380 1,200 (1) 234180 227674 106 Allowance for bad debts B-5 (10485) (4800) 1,200 (1) 2,906 (2) (6506)