Student Intro
Solutions for the Biltrite Bicycles Inc. Case
Module I - Assessment of Inherent Risk..............................................................3 Module II – PRELIMINARY ASSESSMENT OF CONTROL RISK BASED ON AN UNDERSTANDING OF THE DESIGN OF CONTROLS ................17 Module III - Control Testing: Sales Processing................................................29 Module IV - PPS Sampling: Factory Equipment Additions............................31 Module V - Accounts Receivable Aging Analysis..............................................35 Module VI - Sales and Purchases Cutoff Tests..................................................42 Module VII - Search for Unrecorded Liabilities...............................................47 Module VIII - Dallas Dollar Bank Reconciliation.............................................49 Module IX- Analysis of Interbank Transfers....................................................52 Module X - Analysis of Marketable Securities..................................................54 Module XI - Plant Asset Additions and Disposals.............................................57 Module XII - Estimated Liability for Product Warranty.................................61 Module XIII - Mortgage Note Payable and Note Payable to Bank Two.........63 Module XIV - Working Trial Balance................................................................66 Module XV - Audit Report..................................................................................80
© 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
BR-2
SOLUTIONS FOR THE BILTRITE CASES
The following pages in this manual contain the solutions to the Biltrite Bicycles, Inc. audit practice case. The solutions are presented by module number. Answers to the narrative questions are presented first, followed by the completed working papers as solutions to those parts requiring audit working
Module I - Assessment of Inherent Risk..............................................................3 Module II – PRELIMINARY ASSESSMENT OF CONTROL RISK BASED ON AN UNDERSTANDING OF THE DESIGN OF CONTROLS ................17 Module III - Control Testing: Sales Processing................................................29 Module IV - PPS Sampling: Factory Equipment Additions............................31 Module V - Accounts Receivable Aging Analysis..............................................35 Module VI - Sales and Purchases Cutoff Tests..................................................42 Module VII - Search for Unrecorded Liabilities...............................................47 Module VIII - Dallas Dollar Bank Reconciliation.............................................49 Module IX- Analysis of Interbank Transfers....................................................52 Module X - Analysis of Marketable Securities..................................................54 Module XI - Plant Asset Additions and Disposals.............................................57 Module XII - Estimated Liability for Product Warranty.................................61 Module XIII - Mortgage Note Payable and Note Payable to Bank Two.........63 Module XIV - Working Trial Balance................................................................66 Module XV - Audit Report..................................................................................80
© 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
BR-2
SOLUTIONS FOR THE BILTRITE CASES
The following pages in this manual contain the solutions to the Biltrite Bicycles, Inc. audit practice case. The solutions are presented by module number. Answers to the narrative questions are presented first, followed by the completed working papers as solutions to those parts requiring audit working