5 the workpaper does not state whether the auditor

5) The workpaper does not state whether the auditor examined
documentation for the Diana’s Supper Club order returned and received
on October 31.
6) Rather than summarizing the confirmations returned without exception,
as was done at the bottom of Working Paper 1, these confirmations
should have been listed separately.
b. 1) Sales P11,100
Accounts receivable P11,100
Inventory 8,600
Cost of goods sold 8,600
To reverse 2016 sale recorded in 2015.
2) Allowance for uncollectible accounts 1,277
Accounts receivable 1,277
To write off uncollectible account.
3) Sales returns and allowances 3,634
Accounts receivable 3,634
To record return of spoiled meat and
recognize loss in period in which incurred.
Meat not restored to inventory, inasmuch
as it was spoiled.
4) Sales 13,000
Accounts receivable 13,000
To correct error in recording customer
remittance as a sale.
5) Sales Returns 334
Accounts receivable 334
Inventory 250
Cost of goods sold 250

Substantive Tests of Receivables and Sales
10- 5
To record return and restore meat to inventory
because meat returned in good condition.
c. (See completed Exhibits 1.1 and 1.2 reproduced below and on the following
page.)
Exhibit 1.1
Monty’s Meat, Inc.
Accounts Receivable - Trade
Aging Analysis
October 31, 2015
Conf. Past Due (Days)
No. Customer Balance Current 1-30 31-60 Over 60
1060 Culley’s Meats P
1,330
P
1,330
1061 Jolly Roger Restaurant 466 P 466
1064 ABC Grocery 4,256 3,000 1,256
(Other) 329,433 280,763 33,467 P12,324 P
2,879
1602 Rudy’s Deli 378 378
1603 General Foods
Grocers
13,468 13,000 468
1607 Kim’s Fresh Meats 2,334 1,074 1,260
1608 Dill’s Discount
Grocery
12,469 12,469
1612 Diana’s Supper Club 866 334 532
10/31 Balance per ledger P365,00
0
P
311,970
P 36,449 P13,234 P
3,347
Audit Adjustments P
(29,345
)
P
(28,068)
P(1,27
7)
10/31 Audited balance P335,65
5
P
283,902
P 36,449 P13,234 P
2,070
#
Cash receipts 11/1 –
11/27
P(210,113
)
P
(13,353
)
P 0P 0 &
11/27 Outstanding P
73,789
P 23,096 P13,234 P
2,070
Estimated percent
uncollectible
10% 25% 70% 100%
10/31 Estimated
uncollectible
P 24,487 P
7,379
P 5,774 P 9,264 P
2,070

10-6
Solutions Manual to Accompany Applied Auditing, 2014 Edition
& Traced subsequent collections to November remittance advices.
# Obtained balances from subsidiary ledger after agreeing to general
ledger control account.
Prepared by: Reviewed by:
Initial Date Initial Date
Exhibit 1.2
Monty’s Meat, Inc.
Accounts Receivable - Trade
Allowance for Doubtful Accounts
October 31, 2015
11/1/15 Balance per general
ledger
P28,000 #
11/1 - 10/31 Monthly provision 24,000 &
11/1 - 10/31 Write-offs (37,000 ) @
10/31/16 Balance per general
ledger
P15,000
AJE 2 (1,277 )
P13,723
AJE 6 P10,777
10/31/16 Audited balance P24,500 ^
AJE 6
Bad debts expense P10,777
Allowance for doubtful accounts P10,777
To adjust allowance for doubtful accounts to
amount
considered reasonable in the circumstances.

Substantive Tests of Receivables and Sales
10- 7
# Traced to last year’s WTB - audited
balance
& Traced to standard journal entries
@ Examined documentation and discussed with credit manager and
legal counsel
^ In light of aging analysis, the above balance, as adjusted, appears to
be adequate.