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 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 now 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, and equipment ……………………………………………… 9,700,100
Accumulated amortization, PPE ………………………………………. (3,607,597)
Accounts payable ………………………………………………………. (222,400)
Warranty provision ………………………………………………………. (87,000)
Bank loan, long-term ………………………………………………………. (1,000,000)