In: Accounting
explain the follow up steps you would want to take to
satisfactorily
clear each of the five comments from customers below. Think about
and document whether the comment
indicates a concern or not, what fraudulent activity could be
happening or what errors could have occurred,
what additional follow-up information would you want to seek out to
gain comfort on the situation, etc.
You have been assigned to the first audit of the Chicago Company
for the year ending March 31, 2017.
Accounts receivable were confirmed on December 31, 2016, and at
that date the receivables consisted of
approximately 200 accounts with balances totaling $956,750.
Seventy-five of these accounts with balances
totaling $650,725 were selected for confirmation. All but 20 of the
confirmation requests have been returned;
36 were signed without comments, 14 had minor differences that have
been cleared satisfactorily, and 5
confirmations had the following comments:
1. We are sorry, but we can’t answer your request for confirmation
of our account as the system we are using
does not provide us the necessary information.
2. The balance of $1,050 was paid on December 23, 2016
3. We never received these goods.
4. The $10,000, representing a deposit under a lease, will be
applied against the rent due to us during 2018,
the last year of the lease.
5. We do not owe you anything at December 31, 2016, as the
goods, represented by your invoice dated
December 30, 2016, number 25050, in the amount of $11,550 were
received on January 5, 2017, on FOB
destination terms.
6. The balance of $7,750 was paid on January 5, 2017.
7. Amount okay, as the goods have been shipped to us on
consignment, we will remit the payment upon
selling the goods.
8. Your credit memo dated December 5, 2016, in the amount of $440 cancels the balance above.
9. We are contesting the propriety of this $12,525 charge. We think the charge is excessive.
10. An advance payment of $2,500 made by us in November 2016
should cover the two invoices totaling
$1,350 shown on the statement attached.