Torpus Manufacturing

Torpus is a small manufacturing company that produces and sells custom plexiglass canopies for small airplanes and speed boats. In the most recent fiscal year in the midst of one of the worst recessions in more 30 years, it reported a profit of about $40,000 on an asset base of $309,238. Torpus had never been audited before, but it wants to borrow more money from its bank, and the bank’s lending officer has insisted on an audit before approving the loan.
      You work for a small accounting firm and have been assigned to conduct the Torpus audit. You plan to begin your work by interviewing Ronald Thump, the CEO, and reviewing the financial statements. The first thing you learn, however, is that the company accountant’s computer had crashed, causing the income statements for the last two years to be lost. The CEO is able to provide you with printed copies of the balance sheets (see the following). He assures you that he will have the lost income statements reconstructed. This is a top priority because a complete set of financial statements is one of the bank’s lending requirements

|Torpus Corporation                                                                                                                 |
|Balance Sheet                                                                                                                       |
|December 31, 2011                                                                                                                   |
|Assets                                                           |Liabilities and Owners’ Equities                                 |
|Cash                             |$   12,022                       |Accts Payable                   |$   12,551                       |
|Accts. Receivable               |43,741                           |Notes Payable                   |21,432                           |
|Inventories                     |165,881                         |Long-Term Debt... [continues]

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