The Albring Company sells electronics equipment and has grown rapidly in the las
ID: 2448417 • Letter: T
Question
The Albring Company sells electronics equipment and has
grown rapidly in the last year by adding new customers. The audit partner has asked
you to evaluate the allowance for doubtful accounts at December 31, 2013. Comparative
information on sales and accounts receivable is included below:
Year Ended Year Ended
12/31/13 12/31/12
Sales $12,169,876 $10,452,513
Accounts Receivable 1,440,381 1,030,933
Allowance for doubtful accounts 90,000 75,000
Bad debt chargeoffs 114,849 103,471
Accounts Receivable:
0–30 days $ 897,035 $ 695,041
30–60 days 254,269 160,989
60–90 days 171,846 105,997
Over 90 days 117,231 68,906
TOTAL $ 1,440,381 $ 1,030,933
a. Identify what tests of controls and substantive tests of transactions you recommend
be performed before conducting your analysis of the allowance for doubtful accounts.
b. Perform analytical procedures to evaluate whether the allowance is fairly stated at
December
Explanation / Answer
Tests of control and substantive transactions to be recommended for verification of allowance of doubtful debts:
Tests of detail include:
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