auditing problems

Some expenses for December 1995 were paid in January 1996. These are as follows: Elecric !ills " #6$%&& 'ommission of Sales a(ens )*$5&&  Telephone  Telephone char(es )1$ )5& +ino +inorr repa epair of deli deli,e ,ery ry e-ui e-uipm pmen en 1&$6% &$6%& & aer !ills 9$#*&  Toal  Toal " 1&6$5&& /yala /yala +erchans obained a one0year loan from 'harered !an amounin( o " 1.# million a an ineres of 162 per annum on 3cober 16$ 1995. /ccrued ineres on his loan was no aen up a year0end.  The company also o4ered mainenance ser,ice conracs conracs on an annual basis. 'ash receips from such conacs amouned o " #)&$&&&$ "%5$ &&& of which is e4eci,e from +ay 1$ 1995 o +ay 1 1996 and he balance is from Sepember 1$ 1995 o Sepember 1$ 1996. Said amoun was credied o unearned ser,ice income. o adusmen has ye been booed as of year0end. 3n +ay 1$ 1995$ /yala +erchans issued became in,ol,ed in a ax dispue wih he !78 perainin( o 199# income ax. 7n December 1995$ an amoun of " )5&$&&& was assessed a(ains he company by he !78. The e(al counsel of /yala +erchans sron(ly feels ha he said assessmen will ha,e o be paid by he company. company. Disre(arded e4ec on income ax; / re,iew of he minues of meein( showed ha a 1&2 cash di,idend was declared o socholders of records as of December 15$ 1995$ payable on January #1$ 1996. /7? !//'E S=EET DE'E+!E8 #1$ 1995 "E8 !33>S !33>S /@D7T /@D7T /DJ@S /DJ@ST+E T+ETSA TSA7/ 7/  !//'E 00000000 000000000000 0000000 000

00000000 000000000000 00000000 00000000 0000000 0000000 0000000 0000000 000000

000000000000 '@88ET /SSETS "ey cash funds #&$&&& 'ash 5)*$&&& +areable securiies )51$&9& /llowance for decline in Balue of securiies 9$)%&; /ccoun uns 8ecei,a i,able0 le0 Trade 1$*&9$##& /llowance for doubful accouns 55$1*&; oes 8ecei,able 65&$&&&

7neres recei,able 0000000000 "aymens: "repaid /d,erisin(#)&$&&& "repaid 7nsurance )C5$&&& 3ce Supplies 7n,enory )1&$ &&& "repaid ren 1*&$5&&  Toal 955$5&&  Toal 'urren /sses %$%96$9)& "83"E8T<$ "/T /D E@7"+ET Aurniure and Fxures 6C9$)&& Deli,ery e-uipmen 1$#*5$&&&  Toal )$&#C$)&& ess: /ccumulaed Depreciaion 5**$%5&; e !oo Balue 1$CC5$C5& 3her /sses )%C$&&&  T3T/ /SSETS 9$516$#%& '@88ET 7/!77T7ES /ccouns "ayable0 Trade *5*$ 16& oes "ayable 1$65&$&&& /ccrued Expenses *C$5)& 7neres payable 0000 7ncome ax payable CC&$16C Di,idends payable 0000 @nearned ser,ice income #)&$&&& Esimaed liabiliy for axes 0000GGGGG  Toal 'urren iabiliies #$#5)$*CC 3? H TE8+ 7/!77T7ES !onds payable )$5&&$&&& Discouns on bonds payable )5&$&&&;  Toal on( erm iabiliies )$)5&$&&& ST3'>=3DE8IS E@7T< "aid0in capial )$%&&$&&& 8eained earnin(s 1$)1#$5)6  Toal SocholdersI E-uiy #$91#$5)6  T3T/ 7/!77T7ES  ST3'>=3DE8SI E@7T< 9$516$#%&

/7? "83A7T /D 3SS  S /@D7T /DJ@ST+ETSA7/ !//'E 000000000000000 00000000000000000000000000000000000 000000000000 Sales 6$5#9$&&& 'os of (oods sold

C$&1%$&&&; 000000000000000 )$5))$&&&

?ross "roF 3perain( expenses

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7ncome from operaions 3her 7ncome

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5. /llowance for doubful accouns a. " CC$1&* b. " 55$ 1*& 6. oes and ineres recei,able a. " 66)$1** b. " 66)$ )** 65&$&&& %. 7n,enories a. " #$C6%$1&& b. "#$6#%$C5& #9&$)&& *. "repaid insurance a. "))C$ 5*# b. " )&C$166 9. "repaid ren a. " %&$&&&

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1%.oes payable a. " 1$#9#$911 b. "1$65&$&&& 1*.7neres payable a. "9#$911 b. "5&$&&& 19.7ncome ax payable a. " CC&$16C b. " )6&$ 1%1 9&6 )&./ccrued expenses

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d. " 1*6$99)

/SE8S M S3@T73S /7? !//'E S=EET December #1$ 1995 "E8 !33>S /@D7T /DJ@ST+ETSA7/ !//'E 000000000000000

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000000000000 '@88ET /SSETS "ey cash funds #&$&&& 16$1#& 'ash 5)*$&&& +areable securiies )51$&9& )51$&9& /llowance for decline in Balue of securiies 9$)%&; 1C$%C&; /ccouns 8ecei,able0 Trade 1$*&9$##& 1$*91$%%& /llowance for doubful accouns 55$1*&; CC$1&*; oes 8ecei,able 65&$&&& 7neres recei,able 000 1)$C5* "aymens: "repaid /d,erisin(#)&$&&& "repaid 7nsurance )C5$&&& 3ce Supplies 7n,enory )1&$ &&& %&$&&& "repaid ren 1*&$5&&  Toal 955$5&&  Toal 'urren /sses %$%96$9)& 6$*#5$&C1 "83"E8T<$ "/T /D E@7"+ET Aurniure and Fxures 6C9$)&& 6C9$)&&

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Deli,ery e-uipmen 1$#*5$&&& 1$#)#$9C&  Toal )$&#C$)&& ess: /ccumulaed Depreciaion 5**$%5&G; 5)&$5)5; e !oo Balue 1$CC5$C5& 3her /sses )%C$&&&  T3T/ /SSETS 9$516$#%& *$561$656 '@88ET 7/!77T7ES /ccouns "ayable0 Trade *5*$ 16& *9C$16& oes "ayable 1$65&$&&& 1$#&&$&&& /ccrued Expenses *C$5)& 191$&)& 7neres payable 0000 9#$911 7ncome ax payable CC&$16C 1*&$1*% Di,idends payable 0000 @nearned ser,ice income #)&$&&& Esimaed liabiliy for axes 0000GGGGG )5&$&&&  Toal 'urren iabiliies #$#5)$*CC #$#6%$611 3? H TE8+ 7/!77T7ES !onds payable )$5&&$&&& )$5&&$&&& Discouns on bonds payable )5&$&&&; )16$66%;  Toal on( erm iabiliies )$)5&$&&& ST3'>=3DE8IS E@7T< "aid0in capial )$%&&$&&& )$%&&$&&& 8eained earnin(s 1$)1#$5)6  Toal SocholdersI E-uiy #$91#$5)6  T3T/ 7/!77T7ES  ST3'>=3DE8SI E@7T< 9$516$#%& *$561$656 /7? "83A7T /D 3SS  
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