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Early in January 2011, the internal auditors for Arkansas Inc. discovered these errors and omissions in their review of the 2010 financial records. Arkansas Inc. has not yet closed its books for 2010.1. A $1,600 sale made to Ed’s Automotive in December, 2010 was incorrectly charged to the account of Ed’s Upholstery.2. A $21,000 premium for a one-year fire and extended coverage insurance policy covering the policy period May 1, 2010 to April 30, 2011, was initially recorded as expense and has not been adjusted.3. The December 31, 2009, balance of accounts receivable was materially overstated by $18,000 as a result of an error.
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