Accounting 406: Dynamic Case—Part 1 Jr. Core Auditing: Mini-Case & Quiz The Search for Unrecorded Liabilities, Part 1 You have been assigned to do the search for unrecorded liabilities for Dynamic...

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Accounting 406: Dynamic Case—Part 1 Jr. Core Auditing: Mini-Case & Quiz The Search for Unrecorded Liabilities, Part 1 You have been assigned to do the search for unrecorded liabilities for Dynamic Systems, Inc. Dynamic Systems is a privately held, mid-sized computer manufacturer that is a relatively young, growing company. The company has very little debt and is under family ownership. Their controls are relatively weak in the purchases and payables cycle and you have found unrecorded liabilities in prior audits. Also, the work on the inventory account has been completed and you can assume that the inventory observation and other audit work led to a correct inventory account balance. The Audit Senior has told you that based on tolerable misstatement for this cycle; you should restrict your search to disbursements after year-end of $100,000 or more. Thus, the Senior does not want you to spend time investigating disbursements under $100,000. All inventory items are shipped from vendors as “FOB Destination,” so ownership transfers to Dynamic upon receipt. You should have downloaded two spreadsheets for use in completing the case. On one spreadsheet (Dynamic Case 1 2020) you will see information which will allow you to prepare a list of potential unrecorded liabilities. This list of potential unrecorded liabilities is to be prepared individually and will be graded as an individual quiz worth 10 points. This is an individual assignment. You should not discuss it with anyone. Information about how to use this spreadsheet is included below. In the Dynamic Case 1 2020 spreadsheet you will see two tabs: 1) a year-end accounts payable ledger and 2) the cash disbursements journal for all checks written from year-end until the last day you work on the Dynamic audit—March 19, 2021. (Assume March 19, 2021 is today and you are finishing up the Dynamic audit). The ledger (i.e. #1 above) contains the detail of the accounts payable general ledger account and agrees with (i.e., matches) accounts payable on the financial statements. The cash disbursements journal (i.e., #2 above) shows the detail of all 20 check runs that have taken place after year-end. Your task for the individual quiz score is to use the information on these two tabs in the Dynamic Case 1 spreadsheet and compile a list of all potential unrecorded liabilities that fall within the scope of your search as described above. You should fill out the table below and upload it to Canvas. Include your name, section number and group number. HINTS: 1. The population from which you should draw your sample is the cash disbursements journal tab of the spreadsheet. 2. An item is considered potentially unrecorded if it is not included on the year-end accounts payable ledger. 3. Be sure to record the items you identify as potentially unrecorded using the worksheet below. Dynamics Quiz—part IJr. Core—AuditingFall 2020 Name __________________________ Section _______ Group _______ List your potential unrecorded liability items in the table below: Vendor Reference Amount Total number of items ________________ Total dollar value of items _____________