Question
It is now 5 August 2018 and you are auditing Great Horizons Ltd (Great Horizons) for the year ended 30 June 2018. The accounts receivable
It is now 5 August 2018 and you are auditing Great Horizons Ltd (Great Horizons) for the year ended 30 June 2018. The accounts receivable balance at 30 June 2018 was $1,302,765 and was a material account balance for Great Horizons. You are reviewing a planned substantive test of detail to be performed by the junior auditor, Tom Hawkins, aimed at testing the accuracy, valuation an allocation of accounts receivable at 30 June 2018. Tom has randomly selected the following ten transactions included in the accounts receivable balance and intends to check for subsequent payments and also review the customers correspondence file to see if any follow-up on overdue amounts was noted.
| Invoice Due Date | Invoice Amount ($) |
1 | 8 June 2018 | 1,505.50 |
2 | 16 June 2018 | 2,031.85 |
3 | 3 July 2018 | 9,655.90 |
4 | 6 July 2018 | 39.80 |
5 | 20 June 2018 | 121.80 |
6 | 27 May 2018 | 3,335.60 |
7 | 19 July 2018 | 3,225.10 |
8 | 9 June 2018 | 31.25 |
9 | 28 June 2018 | 5,980.40 |
10 | 27 May 2018 | 1,875.15 |
Total |
| 27,802.35 |
1) Explain whether the sample Tom selected will provide sufficient appropriate audit evidence on the accuracy, valuation and allocation of accounts receivable as at 30 June 2018.
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