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1. Assume that you work for Bank of North America and that you have made a $20 million loan to Kinkus Publishing, which must be repaid at the end of this year. Kinkus has undertaken a major expansion, ant eh value of its assets when the loan comes due is expected to be either $25 million (the "bad" outcome) or $50 million (the "good" outcome). These two outcomes are equally likely.
a. What repayment will you receive under each of the two outcomes? What is the expected value of these repayments?
b. Now assume that Kinkus has issued $15 million of new debt to another party, which is also due at the same time that owed to you. Kinkus distributed the proceeds of this debt to its stockholders, so its assets and their projected values at the end of the year are unchanged. If
Kinkus is unable to pay all its debts when they come due, the loans are of equal priority, so both lenders will receive the same fraction of the amounts owed them.
What repayment will you now receive under each of the two outcomes? What is the expected value of these repayments?
Prepare a two-page audit critique, and include each of the following: Briefly describe the purpose of the audit (identify the type of audit). Briefly describe the method(s) used during the audit
Code of Ethics for Professional Accountants
The general ledger account for Accounts Receivable shows a debit balance of $40,000. The Allowance for Uncollectible Accounts has a credit balance of $2,000. Net sales for the year were $250,000.
What effects are decreases in reserve requirements likely to have on (a) bank reserves, (b) Federal Funds rates, (c) bank lending, (d) Treasury bill rates, and (e) the bank prime rate? Explain your answers.
Since an auditor is unable to examine every transaction, it is necessary to determine how many transactions to examine. After completing all the steps of the internal control audit process, the auditor determines a sample of transactions to audit.
What are the circumstances that could prevent the external auditors from providing an unqualified report? What steps can be taken by CSSC to address any concerns?
Essence of Skunk Fragrances, Ltd. sells 5600 units of its perfume collection each year at a price per unit of $425. All sales are on credit with terms of 1/10, net 40. The discount is taken by 60 percent of the customers, by its main competitor, S..
Determine the information contained in internal audit report
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You are required to identify a current controversy relating to Auditors' Independence.
How would you respond to corporate decision to which you're ethically opposed?
Course: AP/ADMS 4551 Auditing: and Other Assurance Services, What is the auditor's responsibility for discovering this type of embezzlement.
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