Question
Darlene Babych is conducting the audit of a wholesale electrical goods distributor, Electra Ltd. Electra supplies appliances to hundreds of individual customers in the Toronto
Darlene Babych is conducting the audit of a wholesale electrical goods distributor, Electra Ltd. Electra supplies appliances to hundreds of individual customers in the Toronto area. It maintains detailed accounts receivable records on a computer system. The customer account master file is updated at the end of each business day. Each customer record in the master file contains the following data:
- customer account number
- customer address
- open (unpaid) invoices at the beginning of the month, by invoice number and date
- sales during the current month, by invoice number and date
- individual cash receipts during the current month
- date of last sale
- date of last cash receipt
Darlene is planning to confirm selected accounts receivable as at the end of the current month. She will have available a computer file of the data on the accounts receivable master file on the date on which the company sends monthly statements to its customers. Ally has a generalized software package to help her in this task.
Required
Detail how Darlene will be able to use the computer software package and accounts receivable master file to:
- select specific accounts receivable for confirmation. How should the sample be selected?
2. identify customers at risk of non-payment. What criteria will be used to highlight these customers
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