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1. Journalize the following transactions in the accounts of Food Unlimited Company, a restaurant supply company that uses the allowance method of accounting for uncollectible receivables:
Jan. 18. Sold merchandise on account to Wings Co., $13,200. The cost of the merchandise sold was $9,500.
Mar. 31. Received $5,000 from Wings Co. and wrote off the remainder owed on the sale of January 18 as uncollectible.
Sept. 3. Reinstated the account of Wings Co. that had been written off on March 31 and received $8,200 cash in full payment.
How did Mr. London's actions violate his auditor's independence? What action was KPMG then obliged to take when it learned of Mr. London's actions?
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