Accounts Receivable

1. Prove the mathematical accuracy of the sales book.

 All balances on sales book are accurately computed but credit output tax to
transaction on December 29 omits to present the amount.
 Based on further testing is appears an error on the allocation of output tax per
sale transaction.
2. Trace postings of sales book totals to general ledger (in the audit of cash the cash
collection were already vouched)
 Posting are properly done.
3. Trace Official Receipts postings to AR subsidiary ledgers.
 O.R. #102 total amount is incorrectly inputted but Account Receivable
Subsidiary Ledger totals are not affected.
 O.R. #110 Sampollo Corp. does not reflect on its AR Subsidiary Ledger but
reflects in the Cash Receipts Book
 O.R. #112 (S.I. #1242) Susan de Leon does not reflect on its AR Subsidiary
Ledger but reflects in the Cash Receipts Book
 O.R. #117 posting to AR Subsidiary Ledger is incorrectly inputted but in Cash
Receipts Book was properly recorded.
4. Trace sales invoice postings to AR subsidiary ledger.
 Posting are properly done.
5. Prove the mathematical accuracy of AR subsidiary ledgers.
 Balances are presented accordingly.
 6. Make an AR aging schedule.
GRACE CORPORATION
Aging of Accounts Receivable
December 31, 2011

Customer Name 1 to 30 days 31 to 60 days Over 60 days

Rex Enterprises (Sept.15) 1,700,000

Louie Tan (Nov.30) 800,000
Eagle Contactors (Nov.20) 300,000
Ida Coronel (Dec.15) 138,295
Alberto & Associates CPA's (Sept.15) 150,000
Cora Tayag (Dec.27) 289,875
Dynasty Construction (Nov.8) 50,000
Anna Reyes – Employee (Nov.20) 300,000
Gwendo Reyes (Nov.5) (50,000)
Benitez Merchandising 138,250
(Dec.30&Jan.3)
Light House Commercial 186,500
(Mar.21&April.19)
Building Blocks (Nov.19) 575,000
Carlo Santo (June 3) 264,000
J.R. Alano (Oct. 5) 1,600,000
Roces Adriano & Salas CPA (Nov. 20) 1,700,000
R.V. Castro & Co. (Sept. 20) (Nov. 224,500 1,000,000
30)
Centeno Antonio & Tantoco, CPA 736,000
(Dec. 29)
J.R Alano Trading (Nov.8) 150,000
Total 1,304,420.00 4,099,500.00 4,900,500.00
 Age of Accounts Receivable Amount
1 to 30 days P 1,304,420.00
31 to 60 days 4,099,500.00
Over 60 days 4,900,500.00
TOTAL ACCOUNTS P 10,304,420.00
RECEIVABLE
Multiply by: Bad Debt Rate 5%
Allowance for Bad Debts P 515, 221

Notes:
a) The 5% Bad debt rate is agreed upon between the company and the auditors.
b) Gwendo Reyes account will be classified as "Advances to Customers" under Current
Liabilities because it is overpayment.
c) Benitez Merchandising P138, 250 unrecorded sale is computed as sale at Dec.30 of
P232, 000 S.I. 1266 less Jan. 3 sale of P93, 750 S.I. 1267.
 7. Summarize the result of AR confirmation.
GRACE CORPORATION
Summary Result of Accounts Receivable Confirmation
December 31, 2011

Account Confirmed
Customer Name Explanation
No. Balance
Rex Enterprises 101 1,700,000 Balance is correct
P484,000 has been paid on
Louie Tan 102 1,284,000
December 28, 2011 per OR# 118
Eagle Contractors 103 No reply upon confirmation
Valera Company 104 No reply upon confirmation
Ida Coronel 105 138,295 Returned by Post Office
Alberto & Associates,
106 150,000 Balance is correct
CPAs
Legarda Company 107 No reply upon confirmation
Cora Tayag 108 289,975 Returned by Post Office
Dynasty Construction 109 No reply upon confirmation
Anna Reyes - Employee 111 300,000 Balance is correct
Gwendo Reyes 112 -50,000 Balance is correct
Benitez Merchandising 113 No reply upon confirmation
Lighthouse Commercial 114 Not Included in Send Out of Confirmation
Building Blocks, Inc. 115 575,000 Balance is correct
Solomon Enterprises 117 Not Included in Send Out of Confirmation
Carlo Santos 118 Not Included in Send Out of Confirmation
Chad Acosta 119 Not Included in Send Out of Confirmation
J.R. Alano 120 No reply upon confirmation
Susan de Leon 121 204,475 Balance is correct
Roces, Adriano, &
123 1,700,000 Balance is correct
Salas, CPA
R.V. Castro & Co. 124 1,224,500 Balance is correct
Johann Morales 125 Not Included in Send Out of Confirmation
Centeno, Antonio, &
126 73,600 Balance is correct
Tantoco, CPA
Luli Samson 127 Not Included in Send Out of Confirmation
J.R. Alano Trading 128 1,600,000 Balance is correct
Notes:
Succeeding Collections of Accounts Receivable include:
a.) PCIB #2255 for the partial payment of account no. 102 for sales invoice #1240 dated
December 28, 2011 per OR#118.
b.) FEBTC #408 for payment of account no. 103 for sales invoice #1264 dated December 30,
2011 per OR#119.
c.) PNB #1122 for payment of account no. 109 for sales invoice #1265 dated December 30,
2011 per OR#120.
d.) PCIB #4425 for payment of account no. 113 for sales invoice #1266 dated December 31,
2011 per OR#121.
e.) FEBTC #775 for payment of account no. 121 for sales invoice #1258 dated December 31,
2011 per OR#122.
f.) PCIB #2277 for payment of account no. 127 for sales invoice #1268 dated January 3,
2012 per OR#123 which will recognized next period.

8. Reconcile total of aging with balance in the general ledger.

Total Aging Balance P 10,304,420.00
Balance in General Ledger P 10,318,635.00
P (14, 215)
P14, 215 is to be deducted to the Accounts Receivable in the general ledger due to the
sales unrecorded by Grace Corporation.
9. Determine the adequacy of the allowance for bad debts.
Allowance for Bad Debts per gen. ledger P 497, 811
Allowance for Bad Debts required allowance P 515, 221
Adjustments to Allowance for Bad Debts (P 17, 410)
10. Post to “AR Confirmation Working Papers” subsequent collections of AR.