Part IV:

Background:

It is now February 6, 2017, and you are ready to begin the year-end audit procedures for the 2016 audit. The client has provided the 2016 data that you requested (Analytics_mindset_case_studies_Techwear_P4.xls) so you can begin your work. Procedures have already been performed by your team to ensure that the data you received is complete and accurate.

The data file includes data on two tabs 2016 AR data and 2016 inventory relief data.

2016 AR data tab

The data fields are the same as what you received for 2015, with the exclusion of the ship date. Additionally, the Type field includes transaction information for the opening balance (Opening Balance), which reconciles with the 2015 ending balance of $684,491.19 and the unapplied cash receipts (Unapplied Receipts).

2016 inventory relief data tab

This data includes the following fields:

ShipNum: this is the shipping number. This number becomes the sales transaction number when the invoice is created, which is the transaction number field on the 2016 AR data tab.

FedExID: this is the FedEx identification number. All items shipped on a given day will have the same number.

CustNum: this is a unique customer number to identify the customer (same field that is on the 2016 AR data tab).

CustName: this is the customer name (same field that is on the 2016 AR data tab).

InvoiceDate: this is the date the sale was invoiced (billed) (same field that is on the 2016 AR data tab).

ShipDate: this is the date the goods were shipped.

InvCostReliefAmount: this is the inventory cost relief amount, or the cost of sales.

The December 31, 2016, working trial balance shows the following:

Accounts receivable $18,114,802.50 (no allowances have been recorded)

Sales $37,333,890.86

Cost of sales $14,269,387.17

1. If you were asked to verify that every shipping number has a recorded sales transaction, which assertion are you testing?

2. How will you join the two tables (A/R and Inventory)? Be specific about which table is on the left, which table is on the right and what type of join you use.

3. What audit adjustment will you propose if you find any exception? Write down the complete journal entry including the debit, credit ( leave the amount empty).