Question: Your client, Red Horse Inc., prepared the
Your client, Red Horse Inc., prepared the following schedule for long term debt for the audit of financial statements for the year ended December 31, 2011: 
Required a. What type of evidence would you examine to support the beginning balances in the accounts? b. What types of evidence would you use to support the additions to each account? c. What types of evidence would you examine to support payments? d. What procedures would you perform related to the ending balances in the accounts? e. What evidence would you use to verify interest rates and due dates? f. How might you use the information presented above to audit interest expense and interest payable accounts?
Transcribed Image Text:
Notes Payable Description 1/1/11 Beginning Balance 12/31/11 Ending Balance Interest Due Date Rate Additions Payments Mortgage Payable Unsecured Notes Payable Secured Bonds Convertible Debentures 6.25% 2020 S 1,125,000 $200,000 $ 925,000 6.00% 2022 7,500,000 475,000 7,025,000 5.75% 2018 2,700,000 $ 1,250,000 300,000 3,650,000 5.25% 2025 10,000,000 10,000,000 Total $1,325,000 $11,250,000 $975,000 $21,600,000
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