Hi, I am doing Accounts Receivable Case for Apollo Shoes. I noticed that Allowance for Doubtful...

Hi, I am doing Accounts Receivable Case for Apollo Shoes. I noticed that Allowance for Doubtful
Accounts has gone down since last year even though AR goes up. I found there is no accurate math for Doubtul Accounts and I caluculate and the estimate was $3,054,918.35 instead of $1,239,009.75. Accounts Receivable for end of year is $ 51,515,259.98. Is this mean that out of $51, 515,259.98, they will not correct $ 3,054,918.35? That means that the company aren't doing right? The company use 8% for estimate. Please help me. Thank you.

Solutions

Expert Solution

To know whether the company are doing right or wrong we have to do the verification of the account receivable for which the following procedures are to be followed

1. Postings in debtor's ledger should be verified by the auditor from the other records.

2. While auditing the book debts auditor should ask the debtors to send the debt statements directly to him.

3. Auditor should obtain a certificate directly from the bank regarding the balances.

4. He may examine the bank ledger by himself.

5. The object of the auditor should be to satisfy himself about the bonafied debts shown in the balance sheet.

6. He should also verify that all bad debts are written off by the authorized person.

7. He should obtain the list over due accounts.

8. Auditor should compare the ledger accounts with the list of sundry debtors balances.

9. Auditor should note down all the undue advances and allowances given and enquire about them.

ekkarill92 answered 1 year ago

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