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.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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
Transcribed Image Text: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.
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