Module V: Accounts Receivable Aging Analysis
Richard Derick has asked you to review the accounts receivable aging analysis and the allowance for doubtful accounts and to recommend any audit adjustments or reclassifications you consider necessary. Shelly Ross had prepared the aging analysis and the allowance for doubtful accounts document before being temporarily transferred to the Joplin Mills audit. She should be back early next week, but Derick would like to "wrap up" accounts receivable this week.
Based on the aging analysis prepared by Ross, you have decided to confirm all large accounts and a sampling of the smaller accounts, using positive confirmations.
Requirements
1. Retrieve the file labeled "20X9_ar.xlsx". Locate the following documentation in this file: WP 3Accounts and notes receivabletrade WP 3.AAccounts receivable aging analysis WP 3.CAllowance for uncollectible accounts Scroll to WP 3.A, "Accounts Receivable Aging Analysis." a. What proportion of the total dollar amount of accounts receivable have you included in your confirmation requests? b. What procedures should you apply in the event of no reply to a request for positive confirmation? c. What is the purpose of analyzing subsequent collections?
2. Based on your analysis of subsequent collections and the results of the confirmation process, are you satisfied that you have sufficient appropriate evidence to evaluate the existence and valuation assertions?
3. Draft the suggested Reclassification Entry A.
4. Scroll to WP 3.C, "Allowance for Uncollectible Accounts." a. What type of correspondence would you examine to satisfy yourself as to the accounts receivable write-offs? b. Draft the suggested Audit Adjustment 2. Are you satisfied that the balance in the allowance is adequate after your recommended adjustment? c. Scroll to WP 3, "Accounts and Notes ReceivableTrade" (lead schedule). Post Reclassification Entry A and Audit Adjustment 2 to the appropriate locations in the lead schedule.
Select the correct answer from the drop-down from the following:
1. Enter the amount of credit balances in customer accounts receivable.
VT I Drony's Dikes Accounts and Hotez Rocciable Trade NA ROH 21, 2017 Prepared by: Date: REVIHHHalliy 1229172UXN12/91/2019 Auli LH H. 1.4 HP Lelyer 12/31/2019 lccounts Receivable-Trade Hotes Receisable Twade 11.700.000 51. Suuuuu $11.920.000 8 90, OUD $11.920.000 680.000 3.B Total Allowance for Doubt Eul Accounts 313.200.000 (SD00.000) 12.000.000 (0020.00 ) 90 912.000.000 { $220.000) 3.0 312, 41111 111111 811,780, 01111 BII 311,281 100 OD 1 WP 3.1 Punye ile accounts receivable liging kcalysis Itecember 31, 2019 PERTH by: Date: Hevieved by: TOTAL CUPPET TAST DOC (DAYO) 61-90 91-120 OVER 120 COMMENTS 21-50 $35.668 CUSTOMER Waw: Supply hley Oupply Atlantic Bicycle Shops, Inc O Hardoarc Outlet Riy Mart Nise . Centers 835 6168 $123.100 6234.500 C Bhh, 200 $773.200 266.000 8234.5DD $56.520 866, 70 TT 9773.200 Exsained icroices and bills of lading C 8922.440 8123, 40U 6 997 , 0 B188. 32 344 $05.G09 $74.210 865,90 23. 9 $65.00 -22.210 833,211 Bit Tiger Discount Stores Bikes and Parts Rrin'x RikHx Chicago Diko and Ti nece Stores Churchill Stores Crandall litorcs F.JIHIL 5 HX Florida Dika World Florida Earts C old Outfitter Gilda in 5-H H SKH Ginny Lou Madest Galos Great Lakes Fitness Centers 833,211 C 312 36 9664.100C $190,260 B133, 156 811 284 C. $109.400 6144.600 312, 366 455.600 8199.760 823, 462 $200.500 819,135 335, 9 861,955 99.89 9109.600 8140.600 : $144.600 923.110 Great TA TIL CA. Bovall Gporte Shops Jackson Bicycle Store Jackson Jaris Janby loc. Jab Yaacc Hoats and Bike Thurul Taanik T. Hari parint Store $144.600 $23.00 33.256 50.000 523,440 $0.256 80 000 $12, 200 $11,240 84,5h $1.320.000 C 1 $1.320.000 $70.000 Exaxined invoices med bills of lading Lee Stores Leener Bordzare Lacaure Tiac $26.000 C 61.946 B3382UULU $3.346 8338,700 (877.400) Cu toc unable to cortir details Ek ! RULLE an illuulluny 95,677 30.09D & Tr 54 ly Lippincott' Long Island Dicycle Cales Lutber Stores barzon Stores Haragon, lac. Nilurivind Hariri Sulu Nav Frylan Rita Trux Am Salk: Nortboast Discount Outlota Nortbvest Gupply Oxford. Iac. Pacitac Pixe Supplier- Payne Sports Shop $166.245 112 450 $112,790 8166, 700 8447.300 8.327.300 $305, 600 $120.409 (372.400) c 95.677 $1GG.145 5122.300 5112.280 C B1bb2UU B442, 3011 C 3452 323 C. $388.900 C 9222.509 C $67.054 5337.90 82,138 B335 223 0 8312, 399 C 9001.070 C 356.7RN SAR.?13 Gullin January 102.100 In Chapter 11 bankruptcy 8337,780 82,238 Par 8336,773 Eksimal shiny EHTI.X PhrlHnAn Enterpris Roar and Sarback $13, 450 1001.070 3155 RON Customer wable to confirm dateile Examined invoices and bills of lading $44.562 6249,240 844.567 $249, 240 Reggie's Bikes Sacrancato Sales Satter Sales and Service 51:rul. lh Guy Siri Snitb & Bisex Bike Sales and Service Soutbrast Spokes. Inc. i 375, RON 877.340 91 .185 8725, 445 ($113,320) $113.760 Customei unable to or fin dotoilu Examined invoices and bills of lading & U (854,765) 8266, 8UU 3446.220 ($113, 320C $43.7G0C (659,265) C B2bb, 8UU B233, 4001 C 816, 788 $122.900 C 03. G C $223.000 C 556.200 898,260 8233, 400 LILL. illi: pute Taglor's Bicycle Shop Texas Wake Zaporiu Turkini. In Trir S H ! Suriin Truly Bilte Turiu Inc. Oucle Jobs's Discount llardware Varser Discount Stores Vagac oud laabort, Inc. & $122,900 1 G00 $12.5DD 37.646 6223.400 laount in dispute $23, 400 SYN.76U $98, 760 Wayne and Lambert, Inc. Wouk, Inc. Zerleena Stores $98, 760 $3,204 $87,180 $3,204 $78,950 $8,230 $9, 456, 221 $831, 216 $1,299, 904 $219,837 $11, 920,028 ============= $18, 120 $94,730 SUBSEQUENT COLLECTIONS(To January 28, 20YO) $ 466,987 $89,900 $202,300 $5,677 $0 - - - - - -- - - - - - - - - - -- - -- - -- UNCOLLECTED (as of January 28, 2070) $11,155,164 $741,316 $1,097,604 $ 214,160 $0 -------- $18, 120 -------- 75.00% $8,989,234 ------------ 1.00% $94,730 -- -- - -- - -- - - -- -- -- - -- - -- -- -- -- - -- - -- -- - -- - -- - -- Estimated percent uncollectible 10.00% 20.00% 50.00% 100.00% Estimated uncollectible-dollars $598, 945 $89,892 $74, 132 $219,521 $107.080 $13,590 $94,730 Audit Reclassification Entry A: Accounts and Notes Receivable-Trade Accounts Payable To reclassify credit balances. Explanation of Audit Legends: C Mailed confirmation request: All accounts >= $200.000 Random selection of remainder confirmed & Confirmation returned-no exception U Unable to confirm (see comments) VT I Drony's Dikes Accounts and Hotez Rocciable Trade NA ROH 21, 2017 Prepared by: Date: REVIHHHalliy 1229172UXN12/91/2019 Auli LH H. 1.4 HP Lelyer 12/31/2019 lccounts Receivable-Trade Hotes Receisable Twade 11.700.000 51. Suuuuu $11.920.000 8 90, OUD $11.920.000 680.000 3.B Total Allowance for Doubt Eul Accounts 313.200.000 (SD00.000) 12.000.000 (0020.00 ) 90 912.000.000 { $220.000) 3.0 312, 41111 111111 811,780, 01111 BII 311,281 100 OD 1 WP 3.1 Punye ile accounts receivable liging kcalysis Itecember 31, 2019 PERTH by: Date: Hevieved by: TOTAL CUPPET TAST DOC (DAYO) 61-90 91-120 OVER 120 COMMENTS 21-50 $35.668 CUSTOMER Waw: Supply hley Oupply Atlantic Bicycle Shops, Inc O Hardoarc Outlet Riy Mart Nise . Centers 835 6168 $123.100 6234.500 C Bhh, 200 $773.200 266.000 8234.5DD $56.520 866, 70 TT 9773.200 Exsained icroices and bills of lading C 8922.440 8123, 40U 6 997 , 0 B188. 32 344 $05.G09 $74.210 865,90 23. 9 $65.00 -22.210 833,211 Bit Tiger Discount Stores Bikes and Parts Rrin'x RikHx Chicago Diko and Ti nece Stores Churchill Stores Crandall litorcs F.JIHIL 5 HX Florida Dika World Florida Earts C old Outfitter Gilda in 5-H H SKH Ginny Lou Madest Galos Great Lakes Fitness Centers 833,211 C 312 36 9664.100C $190,260 B133, 156 811 284 C. $109.400 6144.600 312, 366 455.600 8199.760 823, 462 $200.500 819,135 335, 9 861,955 99.89 9109.600 8140.600 : $144.600 923.110 Great TA TIL CA. Bovall Gporte Shops Jackson Bicycle Store Jackson Jaris Janby loc. Jab Yaacc Hoats and Bike Thurul Taanik T. Hari parint Store $144.600 $23.00 33.256 50.000 523,440 $0.256 80 000 $12, 200 $11,240 84,5h $1.320.000 C 1 $1.320.000 $70.000 Exaxined invoices med bills of lading Lee Stores Leener Bordzare Lacaure Tiac $26.000 C 61.946 B3382UULU $3.346 8338,700 (877.400) Cu toc unable to cortir details Ek ! RULLE an illuulluny 95,677 30.09D & Tr 54 ly Lippincott' Long Island Dicycle Cales Lutber Stores barzon Stores Haragon, lac. Nilurivind Hariri Sulu Nav Frylan Rita Trux Am Salk: Nortboast Discount Outlota Nortbvest Gupply Oxford. Iac. Pacitac Pixe Supplier- Payne Sports Shop $166.245 112 450 $112,790 8166, 700 8447.300 8.327.300 $305, 600 $120.409 (372.400) c 95.677 $1GG.145 5122.300 5112.280 C B1bb2UU B442, 3011 C 3452 323 C. $388.900 C 9222.509 C $67.054 5337.90 82,138 B335 223 0 8312, 399 C 9001.070 C 356.7RN SAR.?13 Gullin January 102.100 In Chapter 11 bankruptcy 8337,780 82,238 Par 8336,773 Eksimal shiny EHTI.X PhrlHnAn Enterpris Roar and Sarback $13, 450 1001.070 3155 RON Customer wable to confirm dateile Examined invoices and bills of lading $44.562 6249,240 844.567 $249, 240 Reggie's Bikes Sacrancato Sales Satter Sales and Service 51:rul. lh Guy Siri Snitb & Bisex Bike Sales and Service Soutbrast Spokes. Inc. i 375, RON 877.340 91 .185 8725, 445 ($113,320) $113.760 Customei unable to or fin dotoilu Examined invoices and bills of lading & U (854,765) 8266, 8UU 3446.220 ($113, 320C $43.7G0C (659,265) C B2bb, 8UU B233, 4001 C 816, 788 $122.900 C 03. G C $223.000 C 556.200 898,260 8233, 400 LILL. illi: pute Taglor's Bicycle Shop Texas Wake Zaporiu Turkini. In Trir S H ! Suriin Truly Bilte Turiu Inc. Oucle Jobs's Discount llardware Varser Discount Stores Vagac oud laabort, Inc. & $122,900 1 G00 $12.5DD 37.646 6223.400 laount in dispute $23, 400 SYN.76U $98, 760 Wayne and Lambert, Inc. Wouk, Inc. Zerleena Stores $98, 760 $3,204 $87,180 $3,204 $78,950 $8,230 $9, 456, 221 $831, 216 $1,299, 904 $219,837 $11, 920,028 ============= $18, 120 $94,730 SUBSEQUENT COLLECTIONS(To January 28, 20YO) $ 466,987 $89,900 $202,300 $5,677 $0 - - - - - -- - - - - - - - - - -- - -- - -- UNCOLLECTED (as of January 28, 2070) $11,155,164 $741,316 $1,097,604 $ 214,160 $0 -------- $18, 120 -------- 75.00% $8,989,234 ------------ 1.00% $94,730 -- -- - -- - -- - - -- -- -- - -- - -- -- -- -- - -- - -- -- - -- - -- - -- Estimated percent uncollectible 10.00% 20.00% 50.00% 100.00% Estimated uncollectible-dollars $598, 945 $89,892 $74, 132 $219,521 $107.080 $13,590 $94,730 Audit Reclassification Entry A: Accounts and Notes Receivable-Trade Accounts Payable To reclassify credit balances. Explanation of Audit Legends: C Mailed confirmation request: All accounts >= $200.000 Random selection of remainder confirmed & Confirmation returned-no exception U Unable to confirm (see comments)
