Professional Documents
Culture Documents
Audit Scope
Tests of the accounting records and such other auditing procedures
considered necessary to enable to express an opinion regarding these
financial statements. This examination will be based on selective test of
recorded transactions. We will plan these tests and other procedure to search
for material errors and irregularities that may affect your financial statements.
Within the inherent limitations of our test-based audit, we expect to obtain
reasonable but not absolute assurance that major misstatements do not exist.
If your investigation indicates the desirability of any changes in internal
control procedure, we shall prepare a report on this subject for your
Company Business Profile
Lakeside Company, primarily owned by Benjamin Rogers, is a consumer
electronics distributor and retailer which originally sold radios, televisions,
and stereo equipment. The said company started in 1977 with a single store.
The business did well and the company expanded thereafter at the rate of
one new store every two or three years. Presently, six stores are in operation,
three in Richmond with one in each of the three nearby cities: Charlottesville,
Fredericksburg, and Petersburg. The first five stores were set up in rented
spaces within small shopping centers while the most recent store was located
in a building Lakeside itself constructed; adjacent to a new shopping mall on
the east side of Richmond. In addition, Lakeside owns a warehouse which also
provides office space for the companys administrative staff.
In 1990, Lakeside began concentrating on sale of high-end audio and video
equipment and it became the sole distributor of Cypress Products for Virginia
and North Carolina. Currently, Lakeside carry Cypress products almost
exclusively in stores. Cypress is not so much known in Richmond therefore,
Lakesides sales declined initially, but rebounded in 1995 and 1996.
Audit Approach
Balance
Sheet
Dec. 31, 1989
Dec. 31, 1990
LIABILITIES
AND STOCKHOLDERS' EQUITY
1989
1990
ASSETS
Current Liabilities
Current
Assets - Current
Notes Payable
20,000
20,000
Income Statement
Notes Payable - Trade
549,000
696,000
Sales
5,172,000
5,778,000
Cash
68,000
71,000 166,000
Accounts
Payable - Cypress
156,000
Sales Returns Accts.
and Discounts
Rec.-Distributorship
293,000(401,000)
388,000
Accrued
Expenses and Taxes (325,000)
Allow.
for Doubtful Accts
(19,000)
(24,000) 135,000
Payable
106,000
Net Sales
Net
Rec.
TotalAccts.
Current
Liabilities
Cost of Goods Inventory-FIFO
Sold
cost
lower
of cost -orLong
market
Notes
Payable
Term
4,847,000
(3,084,000)
Gross Profit
1,763,000
Total Current
Liabilities
Assets
Salaries, Commissions,
(916,000)
Bonuses
Land, Building, and Equipment
Advertising and
Selling
Stockholders'
Land,
Building
Equity
and Equipment (203,000)
Expenses
Accumulated
Common Stock,
Depreciation
10,000
Rent Expenses
(114,000)
shares
Depreciation Expenses
(45,000)
Net
issued
Land,
andBuild.
outstanding,
and Equip.
$1
Leasehold
Other GeneralPar
and Admin-Improvements
Accumulated
Additional Paid-In
Depreciation
Capital
istrative Expenses
(174,000)
Retained Earnings
Interest ExpenseNet Leasehold Improvements (87,000)
Total Stockholders' Equity
Total
Assets
Income Before Income
Taxes
224,000
Income Taxes Total Stockholders' Equity
and Liabilities
Net Income
5,377,000
274,000
831,000
(3,435,000)
786,000
355,000
1,942,000
1,186,000
1,128,000
(1,021,000)
486,000(216,000)
(143,000)
(146,000)
343,000
10,000 (46,000)
208,000
140,000
(86,000)
(195,000)
257,000
122,000(114,000)
407,000
1,593,000 204,000
(89,000)
364,000 1,017,000
946,000 335,000
1,381,000 1,352,000
497,000
(179,000)
318,000 10,000
211,000
(96,000) 140,000
312,000
115,000
462,000
1,814,000
(82,000)
1,593,000
1,814,000
135,000
122,000
193,000
(71,000)
257,000
(67,000)
257,000
312,000