Apollo Shoes, Inc. Cash Lead Schedule						Prepared by
For Year Ended 12/31/2017						Reviewed by
PBC
			(Audited)		Unaudited
			Balance		Balance
Acct #	Account Title		12/31/16		12/31/17
10100	Cash on Hand		$1,987.28		$2,275.23
10200	Regular Checking		$198,116.52		$557,125.92
10300	Payroll Checking		$0.00		$0.00
10400	Savings		$3,044,958.13		$3,645,599.15
---------------	----------------------------------	----	--------------------------------	----	----------------------
			$3,245,061.93		$4,205,000.30

Date: 28 JAN 2018 15:37:42 +0000
From: "Darlene Wardlaw" <[email protected]>
Subject: Audit of Accounts Receivable

We received a number of accounts receivable (and one pre-paidinsurance) confirmations that I put on your desk when I stopped byto talk to Samuel Carboy this morning. With the goodresponse rate on the positive confirmations, you can probably startworking on A/R now.

While I think of it, you need to prepare a memo(C-2-1) addressing the followingissues:

Describe the two forms of accounts receivable confirmationrequests that you used and indicate the factors that you consideredin determining which type to use.

What “alternative procedures” are you going to use to verify theexistence of these accounts and the gross value of the receivablesif the customers who receive positive confirmations never reply,even to a second request?

Put the confirmations in the audit documentation(C-2-2, C-2-3, C-2-4, etc.). Address anydiscrepancies between the client and the customer and proposeadjustments as necessary.

It would also be helpful to indicate the payments received byApollo on the Aged Trial Balance Schedule (C-2). You canget these off of any early January deposits slips. If you getcopies from the client, be sure to tie the totals into depositsindicated on the cutoff bank statement received directly from thebank.

Lastly, the allowance for doubtful accounts looks pretty low.A/R goes up, but the allowance goes down? I need a separateaudit documentation (C-3) addressing the reasonableness ofApollo’s Allowance for Doubtful Accounts. You canspecifically identify troubled accounts, look at subsequent cashcollections, look at what Apollo’s competitors do, look at whatApollo has done in the past (bad debt expense as a % of sales,allowance for doubtful accounts as a % of total receivables) todevelop your estimate of what should be in the allowance. Alsoconsider current and previous A/R Turnover and Days’ Sales in A/Rratios.

DW

Question is that:   Ensure that the adjusted bookbalance ties to the Cash Lead Schedule (B-1), and that the balanceper bank statement tie to Bank Confirmation (B-3). Explain what youdo to achieve this audit objective and your finding (1 point).