You have audited the financial statements of Heft Company Ltd for several years. Internal controls for accounts receivable are satisfactory. The Heft Company operates on a calendar-year basis. An interim audit, which included confirmation of the accounts receivable, was performed on 31 August and indicated that the accounting for cash, sales, sales returns and allowances, and receivables was reliable.

The company's sales are principally to manufacturing concerns. There are about 1500 active trade accounts receivable, of which about 35% (in number) represent 65% of the total dollar amount. The accounts receivable are maintained alphabetically in a master file of accounts receivable.

Shipping document data are keyed-in to a computer system that simultaneously produces a sales invoice, sales journal and an updated accounts receivable master file. All cash receipts are in the form of customers' cheques. Information for cash receipts is obtained from the remittance advice portions of customers' cheques. The computer operator compares the remittance advices with the list of cheques that was prepared by another person when the mail was received. As for sales, a cash receipts journal and updated accounts receivable master file are simultaneously prepared after the cash receipts information is entered.

Summary totals are produced monthly by the computer operations department for updating the general ledger master file accounts such as cash, sales and accounts receivable. An aged trial balance is prepared monthly.

REQUIRED

Prepare the additional audit procedures necessary for testing the balances in the sales and collection cycle. (Ignore bad debts and allowance for doubtful debts.)