Items 1 through 10 represent tick marks (symbols) that indicate procedures performed or comments documented in auditing the Long-term debt account of American Manufacturers, Inc.Select, from the list of procedures/comments below, the procedure/comment that the auditor most likely performed/documented at each point of the audit where a tick mark was made on the working papers.Select only one procedure/comment for each item.A procedure/comment may be selected once or not at all.Assume that the working papers foot and crossfoot. American Manufacturers, Inc.
LONG-TERM DEBT
October 31, 20X1 | Lender | Interest rate | Payment items | Collateral | Balance
10/31/X0 | Current year
borrowings | Current year
reductions | Balance
10/31/X1 | Interest
paid to | Accrued
interest
payable
10/31/X1 | Comments | | Δ First National Bank | 10% | Interest only on last day of each quarter, principal due in full on 9/30/X3. | Manufacturing equipment | 500,000# | 200,000†
3/31/X1 | (100,000)Σ
6/30/X1 | 600,000√ | 9/30/X1 | 5,000∇ | First National confirms that interest payments are current and agrees with account balance. | | Δ Second State Bank | 9% | $10,000 principal plus interest due on the 1st of each month; due in full on 1/1/X4. | First mortgage on production facilities | 380,000# | 0 | (110,000)∧ | 270,00√↔ | 9/30/X1 | 2,025∇ | Monthly payment for $12,025 was mailed on 11/3/X1; Second State agrees with account balance. | | Δ Third Savings & Loan | 12% | $5,000 principal plus interest due on the 15th of each month; due in full on 10/15/X3. | Second mortgage on production facilities | 180,000# | 0 | (60,000) | 120,000*↔ | 10/15X1 | 600 | Third Savings & Loan claims 10/15/X1 payment wasn't received as of 11/5/X1; adjusting entry proposed to increase balance $5,000 and increase accrued interest payable. | | Δ A. Clark majority stockholder | 0% | Due in full 10/31/X4. | Unsecured | 700,000#
1,760,000 | 0
200,000 | (200,000)
10/28/X1
(470,000) | 500,000√
1,490,000⊕ | | 0
7,625⊕ | Borrowed additional $200,000 from Clark on 11/5/X1; need to investigate reborrowing just after year-end and consider imputed interest on 0% stockholder loan. | | Selection list | | A.Confirmed, without exception. | G.Agreed to canceled checks and lender's monthly statements | | B.Confirmed, with exception. | H.Agreed to canceled check and board of directors' authorization. | | C.Traced amount to prior year's working papers. | I.Agreed to interest rate, terms, and collateral to note and load agreement. | | D.Traced amount to current year's trial balance and general ledger. | J.Agreed to loan agreement, validated bank deposit ticket, and board of directors' authorization. | | E.Does not recomputed correctly. | K.Reclassification entry proposed for current portion of long-term debt. | | F.Tested reasonableness of calculations. | | 3. †
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