Mod ul e V : Ac c ou nts Re ce iv ab le Ag in g A na ly si s 597
Module V: Accounts Receivable
Aging Analysis
Richard Derick has asked you to review the accounts receivable aging analysis and
the allowance for doubtful accounts and to recommend any audit adjustments or
reclassifications you consider necessary. Shelly Ross had prepared the aging analysis
and the allowance for doubtful accounts document before being temporarily trans-
ferred to the Joplin Mills audit. She should be back early next week, but Derick
would like to “wrap up” accounts receivable this week.
Based on the aging analysis prepared by Ross, you have decided to confirm
all large accounts and a sampling of the smaller accounts, using positive
confirmations.
Requirements
1. Using the spreadsheet program and downloaded data, retrieve the file
labeled “AR.” Locate the following documentation in this file:
● WP 3—Accounts and notes receivable—trade
● WP 3.A—Accounts receivable aging analysis
● WP 3.C—Allowance for uncollectible accounts
Scroll to WP 3.A, “Accounts Receivable Aging Analysis.”
a. What proportion of the total dollar amount of accounts receivable have
you included in your confirmation requests?
b. What procedures should you apply in the event of no reply to a request
for positive confirmation?
c. What is the purpose of analyzing subsequent collections?
2. Based on your analysis of subsequent collections and the results of the
confirmation process, are you satisfied that you have sufficient evidence to
evaluate the existence and valuation assertions?
3. Draft the suggested Reclassification Entry A.
4. Scroll to WP 3.C, “Allowance for Uncollectible Accounts.”
a. What type of correspondence would you examine to satisfy yourself as
to the accounts receivable write-offs?
b. Draft the suggested Audit Adjustment 2. Are you satisfied that the bal-
ance in the allowance is adequate after your recommended adjustment?
c. Scroll to WP 3, “Accounts and Notes Receivable—Trade” (lead
schedule). Post Reclassification Entry A and Audit Adjustment 2 to the
appropriate locations in the lead schedule.
5. Print the documents 3, 3.A, and 3.C.
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