Barley Company is a medium-sized industrial firm that has been audited by your firm for several years. The only interest-bearing debt owed by Barley is a $300,000 long-term notes payable held by First National Bank. The notes were issued 4 years earlier and will mature in 8 more years. Barley is highly profitable, has no pressing needs for additional financing and has excellent internal controls of the recording of loan and related interest cost transactions.
REQUIRED:
1. Based on this scenario, describe the auditing procedures that you think will be necessary for notes payable and related interest accounts.
2. How will you answer differ if instead Barley Company was unprofitable, needed additional financing and had ineffective internal controls?

Question

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The Answer of Barley Company is a medium-sized industrial firm that has been audited by your firm for several years. The only interest-bearing debt owed by Barley is a $300,000 long-term notes payable held by First National Bank. The notes were issued 4 years earlier and will mature in 8 more years. Barley is highly profitable, has no pressing needs for additional financing and has excellent internal controls of the recording of loan and related interest cost transactions.
REQUIRED:
1. Based on this scenario, describe the auditing procedures that you think will be necessary for notes payable and related interest accounts.
2. How will you answer differ if instead Barley Company was unprofitable, needed additional financing and had ineffective internal controls?

Barley Company Is a Medium-Sized Industrial Firm That Has Been