Use the financial statements and schedules on the following tabs to answer the questions on this tab.
1. Prepare a horizontal and veritical analysis of the Balance Sheet and the Income Statement.
2. Based on the results of your vertical and horizontal analyses, which accounts appear out of alignment? Provide a brief analysis of the relationships between the accounts.
3. Using the Schedule of Equipment and Leasehold Improvements and the Depreciation Schedule, analyze the reasonableness of the depreciation expense for each fixed-asset category on a yearly basis and explain your findings. Assume fixed assets have a 5-year life and a mid-year purchase date.
4. Based on your conclusions in question 3 regarding equipment, which fraud scheme(s) might cuase this activity and what additional procedures might you perform?
5. Based on your conclusions in question 3 regarding leasehold improvements, which fraud scheme(s) might cause this activity and what additional procedures might you perform?
6. Does the relationship between Accounts Receivable and the Allowance for Doubtful Accounts appear reasonable? Why or why not?
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