Auditing: Revenue and Expense Forecast
ACC 235: Auditing EXHIBIT 4.53 Dunder-Mifflin, Inc., Prior Year (Audited), Forecast Current Year, Current Year Actual (Unaudited) Prior year Forecast Current Year
Revenue and Expense: Sales (net) $9,000,000 $9,900,000 $9,720,000
Cost of Goods Sold 6,296,000 6,926,000 7,000,000
Gross Margin 2,704,000 2,974,000 2,720,000
General Expense 2,044,000 2,000,000 2,003,000
Depreciation 300,000 334,000 334,000
Operating Income $360,000 $640,000 $383,000
Interest Expense 60,000 110,000 75,000
Income Taxes (40%) 120,000 212,000 123,200
Net Income $180,000 $318,000 $184,800 Assets:
Cash $600,000 $880,000 $690,800
Accounts Receivable 500,000 600,000 900,000
Allowance for Doubtful Accounts -40,000 -48,000 -90,000
Inventory 1,500,000 1,500,000 1,350,000
Total Current Assets $2,560,000 $2,932,000 $2,850,800
Fixed Assets 3,000,000 4,700,000 4,500,000
Accumulated Depreciation -1,500,000 -1,834,000 -1,834,000
Total Assets $4,060,000 $5,798,000 $5,516,800 Liabilities and Equity:
Accounts Payable $450,000 $450,000 $330,000
Bank Loans, 8% 0 1,750,000 1,750,000
Accrued Interest 60,000 40,000 40,000
Accuruals and Other 50,000 60,000 32,000
Total Current Liabilities $560,000 $2,300,000 $2,152,000
Long-Term Debt, 10% 600,000 400,000 400,000
Total Liabilities $1,160,000 $2,700,000 $2,552,000
Capital Stock 2,000,000 2,000,000 2,000,000
Retained Earnings 900,000 1,098,000 964,800
Total Liabilites and Equity $4,060,000 $5,798,000 $5,516,800 4.53 AUDIT SIMULATION: Preliminary Analytical Procedures. Dunder-Mifflin, Inc. wanted to expand its manufacturing and sales facilities. The company applied for a loan from First Bank, presenting the prior- year audited financial statements and the forecast for the current year shown in Exhibit 4.53 above.
(The company's fiscal year-end is December 31.) The bank was impressed with the business prospects and granted a $1,750,000 loan
Revenue and Expense: Sales (net) $9,000,000 $9,900,000 $9,720,000
Cost of Goods Sold 6,296,000 6,926,000 7,000,000
Gross Margin 2,704,000 2,974,000 2,720,000
General Expense 2,044,000 2,000,000 2,003,000
Depreciation 300,000 334,000 334,000
Operating Income $360,000 $640,000 $383,000
Interest Expense 60,000 110,000 75,000
Income Taxes (40%) 120,000 212,000 123,200
Net Income $180,000 $318,000 $184,800 Assets:
Cash $600,000 $880,000 $690,800
Accounts Receivable 500,000 600,000 900,000
Allowance for Doubtful Accounts -40,000 -48,000 -90,000
Inventory 1,500,000 1,500,000 1,350,000
Total Current Assets $2,560,000 $2,932,000 $2,850,800
Fixed Assets 3,000,000 4,700,000 4,500,000
Accumulated Depreciation -1,500,000 -1,834,000 -1,834,000
Total Assets $4,060,000 $5,798,000 $5,516,800 Liabilities and Equity:
Accounts Payable $450,000 $450,000 $330,000
Bank Loans, 8% 0 1,750,000 1,750,000
Accrued Interest 60,000 40,000 40,000
Accuruals and Other 50,000 60,000 32,000
Total Current Liabilities $560,000 $2,300,000 $2,152,000
Long-Term Debt, 10% 600,000 400,000 400,000
Total Liabilities $1,160,000 $2,700,000 $2,552,000
Capital Stock 2,000,000 2,000,000 2,000,000
Retained Earnings 900,000 1,098,000 964,800
Total Liabilites and Equity $4,060,000 $5,798,000 $5,516,800 4.53 AUDIT SIMULATION: Preliminary Analytical Procedures. Dunder-Mifflin, Inc. wanted to expand its manufacturing and sales facilities. The company applied for a loan from First Bank, presenting the prior- year audited financial statements and the forecast for the current year shown in Exhibit 4.53 above.
(The company's fiscal year-end is December 31.) The bank was impressed with the business prospects and granted a $1,750,000 loan