Since my client has only received order in the year under consideration but actual delivery took place
Question:
Since my client has only received order in the year under consideration but actual delivery took place in another year, this transaction will not be treated as sales for the said year. It will be considered as sales in the year of delivery. Since there is no sales, no accounts receivable can be recorded before sales. Hence I will reduce sales amount and accounts receivable amount by $25000 in conduct of audit. In the second case, I would consider Mary Smith as accounts receivable as on December 31, 2014 since though she has mailed check but my client either did not deposit the same into bank or even if it has deposited, the same is not cleared. Hence it will be correctly shown as accounts receivable in my client's book]
Financial Reporting Financial Statement Analysis and Valuation a strategic perspective
ISBN: 978-1337614689
9th edition
Authors: James M. Wahlen, Stephen P. Baginski, Mark Bradshaw