Example Company Balance Sheet 12/31/2017 and 12/31/2016 Assets Liabilities 12131

Question

Example Company Balance Sheet 12/31/2017 and 12/31/2016 Assets Liabilities 1213112017 1213112016 1213112017 1213112016 Current Assets Current Liabilities 60,000100,000 2,500 4,000 50,00080,000 35,00042,000 3,200 1,000 300 131,500 Cash Petty Cash Notes payable 1,000 Accounts Receivable ne40,000 65,000 10,00012,000 3,0002,500 4,500 130,000185,000 5,000 ts payable wages payable Interest payable Taxes pajable Unearned revenues 3,000 Inventory Supplies Prepaid Insurance 1,500 92,500 12,000 Total current assets Total current liabilities Property. plat and equipment Land Long-term liabilities Notes payable Bonds payable 2,00022,000 75,000100,000 87,000122,000 30,00030,000 Land improvements Buildings Equipment Less: accumulated deprec 25,000)120,000] 4,500 65,00065,000 26,000 4,000 Total long-term liabilities 8,000 Total liabilities 179,500253,500 Prop, plant, and equip-ne 100,500 87,000 Intangible assets Stockholders Equit Goodwil Trade names 15,00015,0 10,000 25,000 Common Stock Retained Earnings 5,000 5,000 74,00034,500 3,000 Total intangible assets Other assets Total assets 18,000 3,000 258,500 293,000 Total Stockholders' equity 79,00039,500 3,000 Total liabilities and stockhold 258,500 293,000

Explanation / Answer

Question 1: The revenue has reduced by almost 20%. Please explain this reduction in revenue.

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Question 2: Office supplies expense has increased 3 fold, i.e. increased from USD 10,000 to USD 30,000. Please explain the increase in expense

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Question 3: The entity seems to have sold off some fixed assets and also purchased some. Gain on sale of asset is also recorded. Please provide complete details and explanation of the capital expenditure incurred and assets disposed off.

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Question 4: The prepaid expense number seem to have increased significantly. Please explain the reason for this increase

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Question 5: The profit and loss account shows a loss from lawsuit, in both the year. Please explain in details, the nature of lawsuit and current status

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Question 6: Balance shows a purchase of trademark and the goodwill recorded at the same value as previous year. Please show the relevant supporting documents for tradenames and goodwill impairment testing documents

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These are few areas outlined. There can be other areas which can and should be probed. Further, there seem to be arithmetic errors in the financial statements (profit and loss final calculation is not correct). I will not sign off on the audit report will I get satisfactory answers on all queries from the client

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