Requirement (a): Audit work papers for the accounts receivable and the allowance for doubtful accounts

as of December 31, 2017.

Accounts Receivable as of December 31, 2017

AR Control AR Subsidiary
Unadjusted balances 197,000 198,240
Understatement of accounts written off (200)
Writeoff of uncollectible accounts in the "over 6 months" category (1,000) (1,000)
Customers' credit balances 2,500 2,500
Corrected balance 198,300 199,740
Unlocated difference (adjustment to general ledger balance) 1,440
Adjusted balances 199,740 199,740

Computation of Required Allowance

Adjusted Required
Account classification Balance Adjustment Rate
Balance Allowance
0-1 month outstanding 93,240 2,000 95,240 1% 952.40
1-3 months outstanding 76,820 500 77,320 2% 1,546.40
3-6 months outstanding 22,180 22,180 3% 665.40
over 6 months outstanding 6,000 (1,000) 2,000 50% 1,000.00
3,000 20% 600.00
199,740 4,764.20

Allowance for Doubtful Accounts as of December 31, 2017

Balance per ledger 12,000

Adjustments:
Error on bad debts recovery 324
Understatement of accounts written off (200)
Write off uncollectible accounts in the "over 6 months" category (1,000)
Adjustment of allowance to the required balance (6,359.80)
Adjusted balance 4,764.20

Requirement (b): Proposed audit adjustments.

Doubtful Accounts Expense 324

Allowance for Doubtful Accounts 324
Allowance for Doubtful Accounts 200
Accounts Receivable 200

Allowance for Doubtful Accounts 1,000

Accounts Receivable 1,000

Accounts Receivable 2,000

Advances from Customers 2,000

Accounts Receivable 500

Customers' accounts with credit balances 500

Accounts Receivable 1,440

Sales 1,440

Allowance for Doubtful Accounts 6,359.80

Doubtful Accounts Expense 6,359.80