Question

Nancy Howe, your staff assistant on the April 30, 20X2, audit of Wilcox Company, was transferred to another audit engagement before she could complete the audit of unrecorded accounts payable. Her working paper, which you have reviewed and are satisfied is complete, appears below. Wilcox Company Unrecorded Accounts Payable M-1-1 April 30, 20X2 Invoice Date Vendor and Description Amount Hill & Harper—unpaid legal fees at Apr. 30, X2 (see lawyer’s letter at M-4) $ 1,050 y Apr.1,X2 Drew Insurance Agency—unpaid premium at year-end on fire insurance for period Apr. 1, X2- Mar. 31, X3 (see insurance broker letter at J-1-1). Payment made on May 7, 20X2. 1,980 y Apr.30,X2 Mays and Sage, Stockbrokers—advice for 100 shares of Madison Ltd. common stock (settlement date May 7, X2) 2,150 y Lane Company—shipment received Apr. 30, X2 per receiver no. 3361 and included in Apr. 30, X2, physical inventory; invoice not yet received (amount is per purchase order) 5,888 y $ 11,068 y-Examined document described. In my opinion, the $11,068 adjustment includes all material unrecorded accounts payable. N.A.H. May 29, X2 Prepare a proposed adjusting journal entry for the unrecorded accounts payable of Wilcox Company at April 30, 20X2. The amounts are material. (Do not deal with income taxes.) (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Do not round intermediate computations.)

No	Date	General Journal	Debit	Credit
1	April 30, 20X2	Marketable securities	2,150
		Cost of goods sold	5,888
		Unexpired insurance
		Insurance expense
		Professional fees expense	1,050
		Accounts payable

Answer 1

Solution:

Journal entry:

Details		Debit$	Cerdit$
Marketable securities		2,150
Inventories		5,888
Unexpired insurance (11/12 * $1,980)		1,815
Insurance expenses		165
Professional fees expenses		1,050
Accounts payable			11,068
(To record liability for unpaid invoices)
Unpaid invoices
Jills and haprper		1,050
Drew insurance agency		1,980
Mays and sage		2,150
Lane company		5,888
Total		11,068