question archive Your firm has been engaged to do the current year's audit of Dawood Ltd
Your firm has been engaged to do the current year's audit of Dawood Ltd
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Your firm has been engaged to do the current year's audit of Dawood Ltd., a medium-sized business involved in manufacturing television screens and computer monitors. Dawood is privately owned, and its two shareholders have requested that the annual financial statements be audited for the first time this year. One of the shareholders manages the business; the other is not involved. You are reviewing Dawood's preliminary general ledger trial balance, shown below, to begin the audit planning.
ACCOUNT BALANCE DR/(CR)
Cash 10,009
Accounts Receivable 167,090
Allowance for Bad Debts (25,000)
Inventory, Finished Goods 200,550
Inventory, Work-In-Progress 94,601
Inventory, Purchased Components 199,800
Inventory, Parts 34,400
Property, Plant & Equipment (PPE) 9,700,100
Accumulated amortization, PPE (3,607,597)
Accounts Payable (222,400)
Warranty Provision (87,000)
Bank Loan, Long-Term (1,000,000)
Share Capital, Common Shares (1,500,000)
Retained Earnings (1,738,442)
Revenue (9,005,800)
Cost of Goods Sold 4,696,600
General and Admin Expenses 1,902,500
Other Expenses 180,589
Explain current ratio, inventory turnover and receivable turnover can tell you about the risks in Dawood's financial statements and what further investigation the analytical results may suggest
