our understanding of the arrangements for our audit of the financial statements of Apollo Shoes‚ for the year ending December 31‚ 2012. We will audit Apollo Shoe’s balance sheet as of 12/31/2012‚ along with the related income statement‚ statement of retained earnings‚ and statement of cash flows for the entire year of 2012. We will provide a professional opinion based on the information found in the audit. All of the financial statements will be the responsibility of your management team. SDM Audit’s
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Common-size Income Statement Analysis The common-size income statement shows that Coca-Cola’s cost of goods sold to revenues percentage rose very slightly from 39.14% in 2011 to 39.32% in 2013. At the same time‚ PepsiCo’s cost of goods sold to revenues percentage decreased from 47.51% in 2011 to 47.04% in 2013‚ bringing the 3-year-average to 47.44%. However‚ 47.44% is still much higher than Coca-Cola’s 3-year-average of 39.38%. With lower cost of goods sold to revenues ratio‚ Coca-Cola was able to
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Design tests of controls‚ substantive tests of transactions‚ and analytical procedures for the following Apollo Shoes cycles: o Inventory and warehousing cycle o Cash cycle 1. Abstract‚ Inventory and warehousing cycle (tests of controls) YOLANDA 2. Intro‚ Inventory and warehousing (substantive tests of transaction) AMY 3. Conclusion‚ Inventory and warehousing cycle (analytical procedures) JUSTINIA 4. Cash cycle (Test of controls) ANNABELLE 5. Cash cycle (substantive tests of transactions
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Common Size Statements are used to compare financial statements of different-size companies‚ or of the same company over different periods. Common-size analysis - (also called vertical analysis) expresses each line item on a single year’s financial statement as a percent. The base amount for the balance sheet is usually total assets (which is the same number as total liabilities plus stockholders’ equity)‚ and for the income statement it is usually net sales or revenues. By comparing two or more
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Engagement Letter Apollo Shoes‚ This letter is to confirm our understanding of the terms and objectives of our engagement and the nature of the services we will provide. We will audit the consolidated balance sheet of Apollo Shoes as of year end 2007‚ and the related consolidated statements of operations‚ retained earnings‚ and cash flows. The objective of our audit is the expression of an opinion about whether your consolidated financial statements are fairly presented‚ in all material
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on the high side it could be $6 million. This range itself would be considered immaterial because it is below the $7 million threshold. Therefore‚ this one should be left up to management’s decision and a disclosure note should accompany the financial statements indicating that possible range of warranty expenses‚ etc. Warranty Expense $2‚000‚000 Warranty Liability $2‚000‚000 To record the estimated warranty liability. To mark down the loss on the inventory that is now obsolete‚ one first has
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Common-Size Analysis When comparing financial statements‚ it is often necessary to compare successive years ’ statements of the same company or statements from companies of various sizes. Ordinary financial statements can make it difficult to recognize trends or spot disproportionate categories since the figures make it difficult to tell how much a category has changed in relation to the other categories. Common-size statements solve this problem by valuing all categories in relation to a base
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BSA/500 Calculate Financial Ratios Riordan Manufacturing’s Calculated Financial Ratio Current Ratio The current ratio is the measure of the degree to which current assets cover current liabilities. A ratio of more than one suggests that it can pay most of its debts at that point in time. The ability to effectively turn products into cash is a good sign of a company ’s financial state. Current assets $14‚589‚092.09 * $14‚643‚456.43 * Current liabilities $6‚974‚094 $6‚029‚696 Current
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my recent promotion; I look forward to working with you on the new Apollo Shoes engagement. I have read all the information you sent me about Apollo Shoes to gain a better understanding of the company‚ and I feel like I have a firm grasp of the company structure and environment. After reviewing the company’s last three board of directors meetings‚ I determined what expertise would be necessary to carry out the audit on Apollo Shoes. If you can assign these staff to our audit team‚ the productivity
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due. b. Compare the current-year write-off experience to the prior-year allowance. c. Vouch cash receipts after the balance sheet date for collections on past-due accounts. d. Obtain financial statements or credit reports and discuss with the credit manager collections on large past-due accounts. e. Calculate an allowance estimate using prior relations of write-offs and sales‚ taking under consideration current economic events. Notes Receivable 5. Review the bank confirmations‚ loan agreements
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