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Peach Blossom Cologne Company Accounts Receivable - Aged Trial Balance 12-31-09 (Prepared by client) Confirmation
Peach Blossom Cologne Company
Accounts Receivable - Aged Trial Balance
12-31-09
(Prepared by client)
Confirmation
Subsequent
Customer
Current
30-60
60-90
Over
Total
Mailed
Collection
Comments by Credit
1-30 days
Days
Days
90 Days
Manager--
Alpha Aroma
1150
900
2050
2050
2050
Customer did not report any error in outstanding AR balance despite it already paying all the outstanding AR balance.
Anne Charlotte Cosmetics
30900
1450
32350
0
32350
Confirmation mailed by customer is correct. Client's AR balance is incorrect. Anne Charlotte has already paid the amount outstanding at the end of 2009 of $32,350.
Bobell Beauty Supplies
1460
1460
1460
0
AR balance is correct.
Body Bar
2100
800
1050
3950
3950
1850
Customer did not report any error in outstanding AR balance despite it already paying a portion of the outstanding AR balance.
Capital Odors
1200
1200
1200
0
AR balance is correct.
Cut-Rate Discount Stores
2380
1720
400
4500
4500
1800
Customer did not report any error in outstanding AR balance despite it already paying a portion of the outstanding AR balance.
Darings
35500
7600
43100
7100
36000
Confirmation mailed by customer is correct. Client's AR balance is incorrect. Darings has already paid $36,000, leaving only $7,100 amount of AR outstanding.
Frankies Floral Frag.
20400
20400
20400
0
Confirmation mailed by customer is correct. And client's balance of AR is also correct.
Incense, Inc.
6300
600
6900
6900
6000
Customer did not report any error in outstanding AR balance despite it already paying all the outstanding AR balance.
Janis Department Stores
4600
1150
5750
5750
5200
Customer did not report any error in outstanding AR balance despite it already paying a portion of the outstanding AR balance.
Lone Star Supply
3290
3290
3290
3290
Customer did not report any error in outstanding AR balance despite it already paying all the outstanding AR balance.
Rausch's Dept. Store
2700
1250
3950
3950
3950
Customer did not report any error in outstanding AR balance despite it already paying all the outstanding AR balance.
Tears and Doefall Co.
75450
75450
75450
70000
Confirmation mailed by customer and client's AR balance are both incorrect. Customer has already paid $70,000, leaving only $5,450 amount of AR outstanding.
William's Fragrances
1850
1850
1850
0
AR balance is correct.
Young and Beautiful
24350
24350
6350
18000
Confirmation mailed by customer is correct. Client's AR balance is incorrect. Customer has already paid $18,000, leaving only $6.350 amount of AR outstanding.
Various Other Acct's.
4830
4830
4830
0
AR balance is correct.
Per client
211200
20380
2600
1200
235380
149030
180490

AUDIT PROGRAM

 

Generalized Evidence-

No.

Audit Objectives

Potential Risks / Errors

Gathering Audit

 

Procedures

1

Existence or

- Occurence of unauthorized sales

-

Sales figures and

Occurrence (All of the recorded account receivable transactions exist)

- Occurence of unauthorized write-o account receivable examination, after that match them with source documents (Vouching)

 

-

Pick a sample of source

 

documents and trace forward to verifiy that the transactions related to accounts receivable exist

(Tracing)

 

-

Computation of sales

 

and receivables amounts and ratio analysis (Analytical Procedures)

 

-

Send confirmation letter to related customers (Positive and Negative

 

Confrmation)

2

Completeness (All

- Goods may have been shipped bu - Send confirmation letter

account receivable is

- Sales may have been billed to the to related customers

included in the balance

- Merchandise may have been sold

(Confirmation)

sheet)

-

Account receivable figure and sales

 

examination (Vouching)

 

-

Contact the related customers (Verbal Inquiry)

-

Pick a sample of

 

related source documents (e.g. delivery order, shipping notice)

and compare it to master file (Tracing)

 

-

Cut-off test (sales

 

register and shipping

records)

3

Rights and Obligations

Sales may have been recorded in

-

Take a sample of

(The accounts receivable are bona fide claims owed the

the wrong fiscal year

related source documents (e.g. delivery order, shipping notice)

company)

and compare it to master file (Tracing)

 

-

Compare sales and

 

accounts receivable figures with prior years (Analytical Procedures)

 

-

Check whether there

 

are any goods in consignment

 

-

Pledge any collateral goods

4

Valuation or Allocation (The accounts receivable are collectible in the

Having incorrect recorded sales am - Perform recalculation of sales transactions on aging receivable (Recalculation)

normal course of

-

Compare the

business)

recalculation result with sales figure (Analytical

 

Procedures)

5

Presentation and Disclosure (Pledged accounts receivable or accounts receivable used as collateral are

Sales may have been posted to the - Review of account receivable figures to ensure that they are properly classified (Scanning)

disclosed and

-

Disclose any

Receivables from directors officers and

troublesome collectability

Substantive Tests of Transactions

- Account for a sequence of sales invoices

- Review sales journal and

master file for unusual transactions and amounts

- Trace sales journal entries to

supporting documents, including bill of lading, duplicate sales invoice, sales order, and customer order

- Observe suprise count

Trace selected shipping documents to the sales journal to ensure that every transaction is

included

- Compare date of recording of

sale in sales journal with duplicate sales invoice and bill of lading

- Foot and cross-foot the sales

journal and trace totals to the

general ledger

- Trace a sample of sales

invoices from sales journal to accounts receivable master file

and test for amount, date, and invoice number

- Trace entries in sales journal to sales invoices

- Recompute prices on sales invoices

Examine duplicate sales invoice f