A subsequent event is one that occurs after the date of the financial statements (i. e., December 31, 2013) but prior to the auditor having dated (or possibly issued) the audit report (i. e., March 15, 2014). One type of subsequent event is where additional evidence becomes available before the statements have been issued that sheds light on certain estimates previously made in the statements. A good example is additional evidence about the collectability of a receivable that relates to its valuation in the December 31, 2013, financial statements but is not uncovered until January 31, 2014. Why is it important from an auditing perspective that an auditor be required to adjust the financial statement amounts for some material subsequent events

During january 2018, the following transactions occur: january 1 purchase equipment for $20,600. the company estimates a residual value of $2,600 and a five-year service life. january 4 pay cash on accounts payable, $10,600. january 8 purchase additional inventory on account, $93,900. january 15 receive cash on accounts receivable, $23,100 january 19 pay cash for salaries, $30,900. january 28 pay cash for january utilities, $17,600. january 30 firework sales for january total $231,000. all of these sales are on account. the cost of the units sold is $120,500. the following information is available on january 31, 2018. depreciation on the equipment for the month of january is calculated using the straight-line method. the company estimates future uncollectible accounts. at the end of january, considering the total ending balance of the accounts receivable account as shown on the general ledger tab, $4,100 is now past due (older than 90 days), while the remainder of the balance is current (less than 90 days old). the company estimates that 50% of the past due balance will be uncollectible and only 3% of the current balance will become uncollectible. record the estimated bad debt expense. accrued interest revenue on notes receivable for january. unpaid salaries at the end of january are $33,700. accrued income taxes at the end of january are $10,100