John, CPA, is auditing the financial statements of Company A for the year ended December 31, 20×8. The un-audited information of selected financial statements items is as follows:

（Expressed in RMB thousands）

FINANCLAL STATEMENTS ITEMS

20×8

20×7

Sales

64000

48000

Cost of sales

54000

42000

Net profit

30

-20

December 31, 20×8

December 31, 20×7

Inventory

16000

12000

Current assets

60000

50000

Total assets

100000

90000

Current liabilities

20000

18000

Total liabilities

30000

25000

During the audit, John has the following findings:

(1)On December 31, 20×8,Company A discounted an undue commercial acceptance bill (with recourse) amounted to RMB 6000000, and was charged discounting interest of RMB 180000 by the bank. Company A made an accounting entry on December 31, 20×8 as follows:

Dr. Cash in Bank RMB 5820000

Dr. Financial Expenses RMB 180000

Cr. Notes Receivable RMB 6000000

(2)In June 20×8, Company A provided guarantee for Company B’s borrowings from Bank C. In December 20×8, since Company B failed to repay the borrowings in time, Company A was sued by Bank C to make relevant repayment amounted to RMB 3000000. As at December 31, 20×8, the lawsuit was still pending, and, based on the reasonable estimate of the guarantee losses made by the management, Company A made an accounting entry as follows:

Dr. Non-operating Expenses RMB 3000000

Cr. Provisions RMB 3000000

On January 10, 20×9,Company A received a judgment on repaying RMB 2500000

to Bank C to settle the guarantee obligation. Company A made the payment and an accounting entry at the end of January 2009 as follows:

Dr. Provisions RMB 3000000

Cr. Cash in Bank RMB 2500000

Cr. Non-operating Income RMB 500000

Required:

(1)For Revenue and Net Profit, explain which one is more appropriate to be used to calculate planning materiality for Company A’s 20×8 financial statements as a whole. Explain the reasons of that conclusion.

(2)Based on the un-audited in formation of selected financial statements items, for the purpose of using analytical procedures as risk assessment procedures, calculate the following ratios:

(a)Inventory Turnover Rate in 20×8;

(b)Gross Profit Ratio in 20×8;

(c)After Tax Return on Total Assets in 20×8; and

(d)Current Ratio as at December 31, 20×8

(3)For each audit finding identified during the audit, list the suggested adjusting entries that John should made for Company A’s 20×8 financial statements. Tax effects, if any, are ignored.

正確答案：

【中文翻譯】注冊(cè)會(huì)計(jì)師約翰負(fù)責(zé)審計(jì)A公司20×8年12月31日的財(cái)務(wù)報(bào)表。以下是未經(jīng)審計(jì)財(cái)務(wù)報(bào)表的部分信息：　　　　　　　　　　　　　　　　　　　　　　　　　　　　?。▎挝唬呵г╉?xiàng)目20×820×7營業(yè)收入64 00048 000營業(yè)成本54 00042 000凈利潤30-2020×8年12月31日20×7年12月31日存貨16 00012 000流動(dòng)資產(chǎn)60 00050 000總資產(chǎn)100 00090 000流動(dòng)負(fù)債20 00018 000總負(fù)債30 00025 000在審計(jì)過程中，約翰發(fā)現(xiàn)以下事項(xiàng)：