Bert Finney, CPA, was engaged to conduct an audit of the financial statements of Clayton Realty Corporation
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Corporation for the month ending January 31, 2012. The examination of monthly rent reconciliation is a vital portion of the audit engagement.
The following rent reconciliation was prepared by the controller of Clayton Realty Corporation and was presented to Finney, who subjected it to various audit procedures:
Clayton Realty Corporation
Rent Reconciliation
For the Month Ended January 31, 2012
Gross apartment rents (Schedule A).........................................................$1,600,800y
Less vacancies (Schedule B).......................................................................20,500y
Net apartment rentals.............................................................................1,580,300
Less unpaid January rents (Schedule C) ..........................................................7,800y
Total................................................................................................1,572,500
Add prepaid rent collected (Apartment 116) ........................................................500y
Total cash collected...................................................................................$1,573,000y
Schedules A, B, and C are available to Finney but are not presented here. Finney evaluated and tested internal controls and found that they could be relied on to produce reliable accounting information. Cash receipts from rental operations are deposited in a special bank account.
Required
What substantive audit procedures should Finney employ during the audit to substantiate the validity of each of the dollar amounts marked by the dagger (†)?
Financial Statements
Financial statements are the standardized formats to present the financial information related to a business or an organization for its users. Financial statements contain the historical information as well as current period’s financial... Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...
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Related Book For
Auditing A Business Risk Approach
ISBN: 978-0538476232
8th edition
Authors: Karla Johnstone, Audrey Gramling, Larry Rittenberg
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