Question: Your new client, Ross Products, Inc., completed its first fiscal year March 31, 20X4. During the course of your audit you discover the following entry

Your new client, Ross Products, Inc., completed its first fiscal year March 31, 20X4. During the course of your audit you discover the following entry in the general journal, dated April 1, 20X3.

Under these circumstances, what steps should the auditors take to verify the $2,400,000 recorded cost of the building? Explainfully.

Building 2,400,000 Mortgage Note Payabie 1,400,000 1,000,000 Common Stock To record (1) acquisition of building constructed by J. A. Ross Construction Co. (a sole proprietorship); (2) assumption of Ross Construction Co. mortgage loan for construction of the building; and (3) issuance of entire authorized common stock (10,000 shares $100 par value) to J. A. Ross.

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