As a result of your preliminary findings related to the 2016 audit (TechWear Part 4), TechWear's Audit Committee (a committee of the Board of Directors) has asked that you postpone the issuance of your audit report until at least 80% of the accounts receivable balance outstanding at December 31, 2016 has been resolved (e.g., collected, written off or returned). Therefore, TechWear has recorded none of the audit adjustments identified during the audit (TechWear Part 4).
As of May 31, 2017, approximately 80% of the accounts receivable balance has been resolved, so it is time to complete your analysis related to the accounts receivable balance at December 31, 2016 and finalize your recommendations related to necessary audit adjustments (that is, what do you believe is the appropriate amount of accounts receivable to report on TechWear's 12/31/2016 balance sheet).
The client has provided you with the data that you requested.
Your team has already performed procedures to ensure that the data you received is complete and accurate.
The data file includes two tabs — 2017 AR data and 2016 Unapplied cash.
2017 AR data tab
This data includes January through May 2017 cash received, write-offs and returns for unadjusted 12/31/2016 account receivable balances. The data fields are the same as what you received for 2016. Additionally, the "Type" field includes transaction information for write offs (Write-off) and returns (Returns). Note that this data includes 2017 cash receipts, write-offs and returns related to all sales recorded by TechWear in 2016.
2016 Unapplied cash tab
Recall that the data file for 2016 included some cash receipts that were unapplied to a specific invoice. The information on 2016 Unapplied cash tab represents the application to date of these receipts (identifies to what sale the cash receipt relates).