Reference no: EM131913330

1) Upon reviewing the bank reconciliation, you realized that the general ledger had not been adjusted for $400 worth of NSF checks received for cash sales. The amounts of the individual checks were too small to make it worthwhile to turn them over to an attorney for collection.

2) During discussions with the marketing department, you discovered that they had recently rolled out a new campaign and made shipments to several major retailers under terms that they could take, display, and sell the products for three months. Any products that were not sold in the three-month “trial period” could be returned. Payment for the products sold (or that they wanted to keep on hand) would need to be paid for during the fourth month of the special promotion. The shipments were made on December 1. Sales were recorded in the amount of $300,000. The cost to manufacture the products was $180,000.

3) While examining the allowance for doubtful accounts, you noticed that the only activity was a beginning balance, and some specific accounts receivable write-offs. Considering the accounts receivable aging, and subsequent collections, you estimated that the most likely scenario was problem accounts of $90,000 (independent of other adjustments). The allowance for doubtful accounts per the preliminary financial statements had a CR balance of $10,000.