Question
Red Earth Pty Ltd records a sale when the goods are dispatched from the warehouse. To test this assertion of management to achieve audit objectives,
- Red Earth Pty Ltd records a sale when the goods are dispatched from the warehouse. To test this assertion of management to achieve audit objectives, you decided to perform year-end cut-off tests on 30th June 2021 and obtained details for the 6 sales invoices entered in the financial system which are given below:
| Sales invoice no. | Amount | Date entered in sales journal (invoice date) | Date of actual despatch |
| 452 | $45,000 | 30/06/2021 | 30/06/2021 |
| 453 | $72,000 | 30/06/2021 | 30/06/2021 |
| 454 | $150,000 | 30/06/2021 | 04/07/2021 |
| 455 | $45,000 | 30/06/2021 | 30/06/2021 |
| 456 | $62,000 | 30/06/2021 | 30/06/2021 |
| 457 | $81,000 | 30/06/2021 | 30/06/2021 |
The accountant provided the information that Invoice Number 454 was accidentally invoiced on 30/06/2021 instead of 04/07/2021 when 720 Granite Tiles were shipped out. The customer has been provided with extended payment terms on this invoice due to invoicing error. However, you couldn't find any reversal entries in the accounts.
You asked for a stock card of Granite Tiles for the month of June 2021. You were provided with the following extract of the stock card:
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Financial Accounting Tools for Business Decision Making
Authors: Jerry J. Weygandt, Paul D. Kimmel, Donald E. Kieso
5th Edition
9781118560952, 1118560957, 978-0470239803
