Question

You were engaged to examine the financial statements of Ronlyn Corporation for the year ended June 30. On May 1, the corporation borrowed $500,000 from the Second National Bank to finance plant expansion.
However, because of unexpected difficulties in acquiring the building site, the expansion had not begun as planned. To make use of the borrowed funds, management decided to invest in shares and bonds; on May 16 the $500,000 was invested in securities.

Required:
In your audit of investments, how would you:
a. Audit the recorded dividend or interest income?
b. Determine market value?
c. Establish the authority for security purchases?



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  • CreatedJanuary 09, 2015
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