Q2. Estimates Tommy Company sells electronics equipment and has grown rapidly in the last year by adding new customers. The company provides a credit term of 30 days for its customers, allowing them to make payments within a period of 30 days from the date of purchase. The audit partner has asked you to evaluate the allowance for doubtful accounts as at 31 December 2023. Comparative information on sales and accounts receivable is: Year ended Year ended All in $ Sales Accounts Receivable Allowance for doubtful accounts All in $ Accounts Receivable in 0-30 days 30-60 days 60-90 days Over 90 days Total 31-Dec-23 Draft 12,169,876 1,440,381 90,000 Year ended 31-Dec-23 897,035 254,269 171,846 117,231 1,440,381 31-Dec-22 Audited 10,452,513 1,030,933 75,000 Year ended 31-Dec-22 695,041 160,989 105,997 68,906 1,030,933 Requirement Perform substantive analytical procedures to evaluate whether the allowance is fairly stated at 31 December 2023. Assume performance materiality for the allowance account is $15,000.

Q2. Estimates Tommy Company sells electronics equipment and has grown rapidly in the last year by adding new customers. The company provides a credit term of 30 days for its customers, allowing them to make payments within a period of 30 days from the date of purchase. The audit partner has asked you to evaluate the allowance for doubtful accounts as at 31 December 2023. Comparative information on sales and accounts receivable is: Year ended Year ended All in $ Sales Accounts Receivable Allowance for doubtful accounts All in $ Accounts Receivable in 0-30 days 30-60 days 60-90 days Over 90 days Total 31-Dec-23 Draft 12,169,876 1,440,381 90,000 Year ended 31-Dec-23 897,035 254,269 171,846 117,231 1,440,381 31-Dec-22 Audited 10,452,513 1,030,933 75,000 Year ended 31-Dec-22 695,041 160,989 105,997 68,906 1,030,933 Requirement Perform substantive analytical procedures to evaluate whether the allowance is fairly stated at 31 December 2023. Assume performance materiality for the allowance account is $15,000.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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