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Chipmunk Company
Balance Sheet
December 31, 2017 and 2016
Liabilities
Current Liabilities
Notes Payable - Bank 5,100,000.00 4,250,000.00
Accounts Payable 1,750,831.00 1,403,247.00
Accrued Liabilities 257,800.00 217,003.00
Federal Income Taxes Payable 35,284.00 45,990.00
Current Portion of Long-Term
Debt 5,642.00 5,642.00
Total Current Liabilities 7,149,557.00 5,921,882.00
Long-Term Liabilities 409,824.00 415,466.00
Total Liabilities 7,559,381.00 6,337,348.00
Stockholders' Equity
Common Stock 10,000.00 10,000.00
Additional Paid-In Capital 2,500,000.00 2,500,000.00
Retained Earnings 7,043,263.00 6,518,413.00
Total Stockholders' Equity 9,553,263.00 9,028,413.00
2017 2016
Sales 26,456,647.00 22,889,060.00
Less: Sales returns and
allowances 37,557.00 27,740.00
Net Sales 26,419,090.00 22,861,320.00
Less: Cost of Sales 19,133,299.00 16,530,114.00
Expenses
Accounting 48,253.00 46,750.00
Advertising 28,624.00 27,947.00
Depreciation 46,415.00 46,578.00
Bad Debts 148,252.00 162,344.00
Business Publications 1,231.00 872.00
Cleaning Services 15,817.00 12,809.00
Fuel 64,161.00 53,566.00
Garbage Collection 4,870.00 4,674.00
Insurance 16,415.00 16,303.00
Interest 427,362.00 364,312.00
Legal 69,752.00 29,914.00
Licensing and
certification fees 33,580.00 27,142.00
Linen Service 3,044.00 1,939.00
Medical benefits 4,178.00 4,624.00
Miscellaneous 47,739.00 16,631.00
Office Supplies 26,390.00 23,289.00
Payroll Benefits 569,110.00 461,214.00
Pension Expense 40,770.00 37,263.00
Postage and Courier 8,623.00 20,962.00
Property Taxes 3,978.00 27,947.00
Rent 158,526.00 120,000.00
Repairs and
Maintenance 51,316.00 26,439.00
Salaries and Wages 4,310,281.00 3,970,092.00
Security 96,980.00 100,098.00
Telephone 5,707.00 7,092.00
Travel and
Entertainment 21,633.00 16,303.00
Utilities 63,329.00 41,919.00
Total Expenses 6,316,336.00 5,669,023.00
Net Income before income tax 969,455.00 662,183.00
Income Tax Expense 344,605.00 239,406.00
Net Income 624,850.00 422,777.00
Retained Earnings at
Add: beginning of the year 6,518,413.00 6,195,636.00
Less: Dividends 100,000.00 100,000.00
Retained Earnings at end of
the year 7,043,263.00 6,518,413.00
Requirements:
1. In a matrix form, prepare a financial statement analyses which must
include the following techniques:
a. Horizontal Analysis
b. Vertical Analysis
c. Ratio Analysis
Sample:
ANALYSIS RESULTS FRAUD
Horizontal Analysis
(Here you compare
the account titles’ (Here you indicate the % (Here you present your
increases and of increase or decrease analyses and indicate the
decreases from 2016 from 2016 to 2017) possible fraud scheme.)
to 2017)
ASSETS
Increase in Cash 21.11% increase
Increase in Accounts
28.04% increase
Receivables
Increase in
9.45% increase
Inventories
Increase in Prepaid
11.97% increase
Expenses
Increase in Deposits 44.35% increase
Decrease in
Property, Plant & 2.61% decrease
Equipment
LIABILITIES
Increase in Notes
20% increase
Payable
Increase in Accounts
24.77% increase
Payable
Increase in Accrued
18.80% increase
Liabilities
Decrease in Federal
Income Taxes 23.28% decrease
Payable
Decrease in Long-
1.36% decrease
Term Liabilities
EQUITY
Increase in Retained
8.05% increase
Earnings
REVENUE
Increase in Sales 15.59% increase
Increase in Sales
returns and 35.39% increase
allowances
Increase in Cost of 15.75% increase
Sales
EXPENSES
Increase in
3.21% increase
Accounting
Increase in
2.42 % increase
Advertising
Decrease in
0.35% decrease
Depreciation
Decrease in Bad
8.68% decrease
debts
Increase in Business
41.17% increase
Publications
Increase in Cleaning
23.48% increase
Services
Increase in Fuel 19.78% increase
Increase in Garbage
4.19% increase
Collection
Increase in
0.69% increase
Insurance
Increase in Interest 17.31% increase
Increase in Legal 133.18% increase
Increase in Licensing
23.72% increase
and certification
Increase in Linen
56.99% increase
Service
Decrease in Medical
9.65% decrease
Benefits
Increase in
187.05% increase
Miscellaneous
Increase in Office
13.32% increase
Supplies
Increase in Payroll
23.39% increase
Benefits
Increase Pension
9.41% increase
Expense
Decrease in Postage
58.86% decrease
and Courier
Decrease Property
85.77% decrease
Taxes
Increase in Rent 32.11% increase
Increase in Repairs 94.09% increase
and Maintenance
Increase in Salaries
8.57% increase
and Wages
Decrease in Security 3.11% decrease
Decrease in
19.53% decrease
Telephone
Increase in Travel
32.69% increase
and Entertainment
Increase in Utilities 51.07% increase
Increase in Income
43.94% increase
Tax Expense
Vertical Analysis
(Here you compare (Here you indicate the % (Here you present your
the accounts in 2017 based on 2017 accounts.) analyses and indicate the
with the base Example: possible fraud scheme.)
accounts or figures.
For Balance Sheet Current Assets are Example:
accounts, the 100% 96.51% of the total Assets Over investment in
is the total Assets, Supplies Expense is 20% current assets
while for income of the Sale Too much supplies used.
Statement accounts,
the 100% is the
Sales.)
Example:
Current Assets
Supplies Expense
Cash 7.71% of the total Assets
Accounts Receivable 9.62% of the total Assets
Inventories 79.03% of the total Assets
Prepaid Expenses 0.10% of the total Assets
Deposits 0.05% of the total Assets
Property, Plant and
3.49% of the total Assets
Equipment
CHIPMUNK COMPANY
September 13, 2018
Financial Fraud
Report Summary
Here you indicate the objectives of your fraud audit. Also, indicate the scope
of your audit, the documents, the personnel and processes you need to
investigate.
Here you indicate the various management pressures and external pressures
that might have caused the perpetrators to commit the fraud.
Here you indicate all lapses in the internal control systems that gave the
perpetrators the opportunity to commit fraud.