The following long-term debt working paper (indexed K-1) was prepared by client personnel and audited by Judith Dranertz, an audit assistant, during the calendar year 20X1 audit of American Widgets, Inc., a continuing audit client. The engagement supervisor is reviewing the working papers.

Required: 

Identify the deficiencies in the working paper that the engagement supervisor should discover.

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American Widgets, Inc. WORKING PAPERS December 31, 20X1 Interest Balance Lender rate Payment terms Collateral 12/31/X0 First Commercial Bank 12% Interest only on 25th of Inventories $ 50,000/ month, principal due in full 1/1/20X5; no prepayment penalty