This is proli assignment from Audit. please try to answer asap.
Proli Footwear AJE Control - Accounts Receivable and Sales December 31, 2014 AJE Number Reference Accounts/Description x = account has impact on income before taxes amount impact on income before taxes amount = Account Number Debit DR/CR Credit Proli Footwear Allowance for Doubtful Accounts Worksheet December 31, 2014 Allowance Account Balance per books - 12/31/2013 1,760,000 Add: Monthly recurring entries 880,000 Subtotal 2,640,000 Less: Actual write-offs during year 1,540,000 Balance per trial balance - 12/31/2014 1,100,000 Audit adjustments: Bad Debt Expense 880,000 880,000 0 880,000 Balances before bad debt expense adjustment Required ending balance: 4.3% of adjusted accounts receivable (1) Adjustment required Balances before bad debt expense adjustment AJE 4-12 Balance per audit - 12/31/2014 Adjusted ending accounts receivable balance Experience ratio Required ending allowance balance 4.3% (1) Based on 12/31/2014 analysis of aged accounts receivable, management agrees that the allowance should be adjusted to 4.3% of ending accounts receivable balance. RP Proli Footwear Confirmation Summary Worksheet (Selected Responses) December 31, 2014 Account # 27136 27116 27160 Customer Harmony Shoe Big Toe Fashions Running Shoes, Inc. 27137 Hot Harvey Puppies 27133 Fashion Hound 27180 Toe Poppers 27178 Terra Shoes 27151 Leather Footwear 27159 27153 Planet Venus Shoes Miracle Heel Balance Customer Confirm Comments 301,575 sent check dated 12/29/14 Auditor Comments check received 1/4 Auditor Action A-6 None merchandise in return defective merchandise returned dept - paper work not processed 22,345 November 2014 balance is $795,313; last invoice JE# 12/25 (B-7) is deemed invalid 982,313 dated 12/1/2014 correct balance is $52,122; billing error due to incorrect 56,189 prices unable to confirm - 3 requests 104,411 sent - no reply received Wrong price list used by billing dept Good credit record 37,188 will try to send partial pay soon Company entering chapter 7 we do not owe this - our acct is 99,122 current sent to wrong customer-should be sent to Terta Shoes balance is $754,477; last invoice JE# 12/43 (B-7) is deemed invalid 970,477 dated 12/1/2014 confirm returned by post office; 4,766 addressee moved 75,888 balance correct unable to contact-sales rep says that building is boarded up over 120 days old; normally a slow payer None Proli Footwear Determination of Sample Size for Substantive Tests of Accounts Receivable Using a Formal Nonstatistical Sampling Plan December 31, 2014 Number of Customers II-7 Tolerable misstatement for each account balance: Testing threshold: West & Fair, CPAs, LLC uses 1/3 of tolerable misstatement II-7 B-3 Accounts Receivable Balance: Amount 364,412 121,471 1,536 26,566,100 Accounts exceeding threshold: B-3 (a) 22 16,926,184 Unusual items: Very delinquent balances (over 90 days) Large credit balances B-3 (b) B-3 (c) 8 1 518,559 (248,788) 0 0 Large sales recorded just prior to year-end Untested amount Additional accounts to be tested Total accounts to be tested e) 1,505 146 177 8,872,569 2,236,846 19,432,801 It has been determined that a moderate level of reliance can be placed on other audit procedures for accounts receivable/sales cycle - this results in a moderate other procedures risk - the targeted detection risk is 20% II-6 RP Additional sample size determination = Untested Amount/Testing Threshold * Other Procedures Risk Factor Untested Amount a) 8,872,569 Testing Threshold b) 121,471 73 c)=a)b) * Other Procedures Risk Factor-per table below Additional accounts to be tested: d) 2.0 146 e)=c)*d) West & Fair, CPAs, LLC uses the following table to determine the other procedures risk factor: Targeted Detection Risk for Accounts Receivable/Sales Cycle Other Procedures Risk Factor From Schedule II-5 High Moderate Very High Below 9% 3.0 2.3 2.0 d) High 10 - 30% 2.7 Moderate 31 - 80% 2.3 1.6 Low Above 81% 2.0 1.2 AUDITOR CONCLUSION: The number of accounts receivable confirmed is adequate. e b) a) ed on other a moderate RP Procedures s risk factor: es Risk Factor Low 2.0 1.6 1.2 1.0 adequate. Name Althlete's Shoes Athletic Fit Barb's Boots Big Toe Fashions Biker's Best Bonnie's Balmoral Shop Boots by Bob Charlene's Chopines Dickie's Dogs Easy Comfort Shoes Fashion Hound Footcare Inc. Harmony Shoe Hot Harvey Puppies Leather by Last Leather Footwear Leather Leaders Miracle Heel Moccasins by Maureen Moccasins for All Ollie's Oxfords Pat's Poulaines Planet Venus Shoes Running Shoes, Inc. Sal's Soles Sam's Sabot Sellers Shoes for All Terra Shoes Terta Shoes Toe Poppers Walking Well Well Heeled Footwear Other 145 confirmed accounts Other 1,359 accounts not confirmed Proli Footwear Accounts Receivable Aging and Summary December 31, 2014 Account # Balance 27100 27101 27115 27116 27117 27118 27119 27120 27121 27129 27133 27134 27136 27137 27149 27151 27152 27153 27154 27155 27156 27158 27159 27160 27175 27176 27177 27178 27179 27180 27183 27184 C C C C C C C C C C C C C C C C C C C C C C C C C C C C C C C C C SL SL SL SL SL SL SL SL SL SL SL SL SL SL SL SL SL SL SL SL SL SL SL SL SL SL SL SL SL SL SL SL CF CF CF CF CF CF CF CF CF CF CF CF CF CF CF CF CF CF CF CF CF CF CF CF CF CF CF CF CF CF CF CF CF CF 941,356 1,119,104 583,128 22,345 460,837 864,088 532,841 648,804 (248,788) 1,194,801 104,411 991,723 301,575 56,189 967,832 970,477 840,670 75,888 124,787 550,068 739,582 118,650 4,766 982,313 664,997 943,613 893,686 0 99,122 37,188 612,597 997,305 2,236,846 7,133,299 qattachments_ae0bc3d5cb439c72f2269e386fab8dfcec67495e.xls a a a b a a a a c a b a a b a a a b a a a b b a a a a b b a a Totals - 1,536 accounts 26,566,100 F Note: All accounts shown were confirmed. See the confirmation summary wor F = Footed CF = Crossfooted SL = Traced account balance to accounts receivable subsidiary ledger RP a = 16,926,184 b = 518,559 qattachments_ae0bc3d5cb439c72f2269e386fab8dfcec67495e.xls r and Summary 014 Current 736,546 831,160 Over 30 Over 60 Over 90 204,810 287,944 583,128 22,345 358,740 864,088 189,000 623,828 (248,788) 1,194,801 102,097 343,841 24,976 104,411 98,680 301,575 293,506 599,537 56,189 967,832 970,477 840,670 75,888 124,787 108,708 441,360 739,582 118,650 4,766 982,313 664,997 943,613 893,686 99,122 37,188 516,797 97,100 1,795,556 2,413,048 95,800 900,205 145,776 4,216,793 95,427 503,458 200,087 qattachments_ae0bc3d5cb439c72f2269e386fab8dfcec67495e.xls 15,934,631 7,562,840 2,349,983 718,646 F F F F ation summary worksheet for the results of this test. RP iary ledger RP 518,559 c = (248,788) qattachments_ae0bc3d5cb439c72f2269e386fab8dfcec67495e.xls Proli Footwear Sales Cut-off Analysis December 31, 2014 Date Customer Account Number Invoice Number Cash Accounts Delivery Receivable Expense #1200 #7150 27137 v 8518 12,278 504 Athlete's Shoes 27100 v 8519 85,190 877 12/30/2014 Pat's Poulaines 27158 v 8520 25,106 148 Dickies' Dogs 27121 v 8521 (8,076) (101) 12/31/2014 Boots by Bob 27119 v 8522 17,856 389 Miracle Heel Leather Scrap Inc 27153 v v 8523 8524 38,901 419 Terra Shoes 27178 v 8525 43,910 800 Biker's Best 27117 v 8526 54,901 866 Ollie's Oxfords 27156 v 8527 71,370 1,400 Easy Comfort Shoes 27129 v 8528 55,555 1,035 Footwear Wearhouse 27135 v 8529 (22,581) 12/29/2014 Hot Harvey Puppies 1/4/2015 1/5/2015 1/6/2015 Running Shoes, Inc 27160 v 8530 V = vouched to invoice copy and shipping records 28,900 118,455 RP 1,508 E = examined credit me Proli Footwear ales Cut-off Analysis December 31, 2014 Sales #5000 Sales Returns #5200 Product Cost 11,774 8,850 84,313 63,299 24,958 17,177 (7,975) 5,781 17,467 12,576 38,482 28,900 28,861 43,110 33,625 54,035 42,650 69,970 51,070 54,520 40,350 Auditor Comments Auditor Action shipped FOB shipping point on 12/29/14 none shipped FOB shipping point on 12/29/14 shipped FOB shipping point on 12/29/14 credit memo sent to customer shipped FOB customer's San Diego Warehouse on 12/31/14 shipped FOB shipping point on 12/31/14 See A-6 adjustment made on A-6 shipped FOB shipping point on 1/4/15 shipped FOB shipping point on 12/30/14 shipped FOB shipping point on 1/5/15 shipped FOB shipping point on 1/5/15 Customer returned overstock; received Proli on 12/29/14 (22,581) 17,380 by shipped FOB shipping point on 116,947 88,880 1/6/15 E = examined credit memo copy and receiving report. RP Proli Footwear Lead Schedule - Accounts Receivable and Sales December 31, 2014 Account Number Account Title Balance per T/B Debit Credit 1200 Accounts Receivable 1250 Allowance for Doubtful Accounts 7100 Bad Debt Expense 5000 Sales 5100 Sales Discounts 372,191 5200 Sales Returns & Allowances 1,117,535 7150 Delivery Expense 2,504,230 - - - - - - Adjustments - - - - - Debit Credit 26,566,100 1,100,000 880,000 148,235,225 Impact of AJEs for this assignment on net income before income taxes = DR/CR Balance per Audit Debit Credit
