TUGAS PENGANTAR PRAKTIK PENGAUDITAN

PERTEMUAN V

CASH AND ACCOUNT RECEIVABLE

KELAS N
Nama Anggota Kelompok 4 :

1. M. WILDAN SULTHON AL FIKRI 041811333006

2. DENNIS WILLIAM PLATE 041811333183
3. ROSALINA 041711333201

UNIVERSITAS AIRLANGGA
FAKULTAS EKONOMI DAN BISNIS
TAHUN 2020/2021
Date : January 19, 2015
To : Darlene Wardlaw
From : Jennifer Babcock
Subject : Apollo Shoes Cash Audit Memo

Apollo Shoes cash has been audited to find out the value after checking the audit. The procedures
required for the audit were carried out according to procedures and we found that:
1. A value of $ 330,375.80 is not eligible for tracing to the checklist that was circulating in
December
2. There is not enough evidence to verify the balance of the saving and payroll
transactions Based on these findings, we suggest:
1. Provide a more detailed list of outgoing and incoming checks at the company
2. An even more extensive examination was undertaken to provide support for the balances
presented by management

Apollo Shoes
Bank Reconciliation
12/31/2017
General Account
Unadjusted book balance 226,750.12
Bank Adjustments 0
Amount to Balance 330,375.80
Adjusted book balance 557,125.92

Balance per bank statement 3,309,192.03

Add Deposits in transit 440,782.45

Deduct O/S Checks -3,192,848.56
Adjustment to Balance
Adjusted bank balance 557,125.92

Payroll Account B-1-2

Unadjusted book balance 0
Bank adjustments 0
 Adjusted book balance 0
Balance per bank statement 0
Add Deposits in transit 598,341.59
Deduct O/S Checks -598,341.59
Adjusted bank balance 0

Cash Lead Schedule

Apollo Shoes Inc.
For Year Ended 12/31/2017

(Audited) Unaudited
Balance Balance
Acct # Account Title 12/31/2016 12/31/2017
10100 Cash on Hand $1,987.28 $2,275.23

10200 Regular Checking $198,116.52 $557,125.92

Account

10300 Payroll Checking $0.00 $0.00

Account

10400 Savings Account $3,044,958.13 $3,645,599.15

$3,245,061.93 $4,205,000.30
 STANDARD FORM TO CONFIRM ACCOUNT
BALANCE INFORMATION WITH FINANCIAL INSTITUTIONS

Apollo Shoes, Inc

CUSTOMER NAME
FINANCIAL INSTITUTION'S NAME AND ADDRESS
We have provided to our accountants the following information as of the close of

Twenty First National Bank business on 12/31/2014, regarding our deposit and loan balances. Please
confirm the accuracy of the information, noting any exceptions to the information
Post Office Box 1
provided. If the balances have been left blank, please complete this form by furnishing
Shoetown, ME 00002 the balance in the appropriate space below.* Although we do not request nor expect
you to conduct a comprehensive, detailed search of your records, if during the process
of completing this confirmation additional information about other deposit and loan
accounts we may have with you comes to your attention, please include such
information below. Please use the enclosed envelope to return the form directly to our
accountants.

1. At the close of business on the date listed above, our records indicated the following deposit balance(s):

ACCOUNT NAME ACCOUNT NO. INTEREST RATE BALANCE*

General Cash Account 604-17-526-5

n/a 3,309,192.03
Payroll Account 604-29-016-3 n/a 0

2. We were directly liable to the financial institution for loans at the close of business on the date listed above as follows:

ACCOUNT DATE THROUGH

NO./ INTEREST WHICH INTEREST IS DESCRIPTION OF
DESCRIPTION BALANCE* DATE DUE RATE PAID COLLATERAL

Note#106316
12,000,000 1/1/2015 8.15% 11/30/2014 Inventory
Line of 44,403,000
Credit,

E.P Unum 1/9/2015

(Customer's Authorized Signature (Date)
The information presented above by the customer is in agreement with our records. Although we have not conducted a
comprehensive, detailed search of our records, no other deposit or loan accounts have come to our attention except as noted below.

I.M. Rich 1/13/2015

(Financial Institution Authorized Signature) (Date)

 EXCEPTIONS AND OR COMMENTS

No exceptions noted.

Please return this form directly to our accountants: Andersen, Olds, and Watershed, LLP
32nd Financial Avenue
Shoetown, ME 00002

* Ordinarily, balances are intentionally left blank if they are not available at the time this form is prepared.

Approved 1990 by American Bankers Association, American Institute of Certified Public Accounts, and Bank Administration Institute.
Additional forms available from: AICPA - Order Department, P.O. Box 1003 NY, NY 10108-1003

Account
604-17-526-5

Page
1 of 2

Apollo Shoes, Inc.

100 Shoe Plaza
Shoetown, ME 00001

*** Your Checking Acount 1-1-2015 THRU 1-15-2015 ***

Your Previous Balance 3,309,192.03

Additions 3 Deposits 29,597,022.90
2 Transfers from other accounts 11,500,000.00
Deductions 55 Checks 12,031,004.11
3 Transfers to other accounts 29,365,369.20
Your Current Balance 3,009,841.62

CYC MC FREQ
1 1 M0000

Deposits and Other Additions

Date Amount Date Amount

1/3/2015 440,782.45 1/13/2015 23,146,954.54
1/5/2015 6,009,285.91

Checks and Other Withdrawals

Check Date Amount Check Date Amount

3586 1/3/2015 8,533.12 3590 1/7/2015 10,587.77
3587 1/3/2015 4,741.30 3603 1/7/2015 14,766.54
3582 1/3/2015 330,375.80 3604 1/7/2015 15,816.16
3591 1/4/2015 7,566.07 3606 1/7/2015 2,794.07
3598 1/4/2015 16,472.00 3583 1/10/2015 9,606.37
3597 1/5/2015 15,746.44 3584 1/10/2015 823.27
3599 1/5/2015 12,610.96 3588 1/10/2015 14,122.85
3602 1/5/2015 6,394.61 3592 1/10/2015 5,684.08
3615 1/5/2015 12,904.00 3594 1/10/2015 12,741.49
3612 1/5/2015 4,194.79 3595 1/10/2015 988.55
3593 1/6/2015 18,421.90 3601 1/10/2015 5,717.19
3610 1/6/2015 5,929.87 3605 1/10/2015 4,807.21
3617 1/6/2015 1,073.73 3607 1/10/2015 2,667,006.32
3619 1/6/2015 7,841.27 3608 1/10/2015 9,515.15
3585 1/6/2015 7,960.15 3609 1/10/2015 1,501.40
3589 1/6/2015 6,707.05 3613 1/10/2015 17,205.98

467,473.06 2,793,684.40

Account
604-17-526-5

Page
2 of 2
Checks and Other Withdrawals

Check Date Amount Check Date Amount

3621 1/10/2015 11,137.19 3627 1/13/2015 6,891.16
3596 1/12/2015 10,014.94 3628 1/13/2015 6,025.43
3600 1/12/2015 200,000.00 3629 1/13/2015 927.09
3611 1/12/2015 1,266.85 3633 1/13/2015 6,924.96
3616 1/12/2015 9,338.02 3635 1/13/2015 5,174.00
3614 1/12/2015 14,366.46 3636 1/13/2015 585.28
3618 1/12/2015 13,377.14 3624 1/14/2015 6,868.12
3620 1/12/2015 2,566.30 3630 1/14/2015 8,419.69
3622 1/13/2015 6,683.93 3631 1/14/2015 8,434,889.09
3623 1/13/2015 2,937.13 3632 1/14/2015 1,117.19
3625 1/13/2015 124.81 3634 1/14/2015 4,994.99
3626 1/13/2015 15,216.88
Transfers to Other Accounts

Date Amount Account

1/7/2015 6,300,000.00 604-03-
739-8
1/13/2015 22,500,000.00 604-03-
739-8
1/14/2015 565,369.20 604-29-
016-3

Transfers from Other Accounts

Date Amount Account

1/10/2015 3,500,000.00 604-03-
739-8
1/14/2015 8,000,000.00 604-03-
739-8

Apollo Shoes, Inc

Bank Deposit Slip
Twenty First National Bank, Account #604-17-526-5

January 5, 2018

Customer Name Check Number Check Amount

Pay More Shoes 16625 $526,004.85
Nuke Me 16949 $35,028.59
Shoe Shack 17309 $730,588.25
Trenchfoot 18544 $85,534.25
Imelda's Closet 11618 $96,452.11
Eight East 18369 $45,258.22
Feet Lamour 15299 $385,241.02
Neutralizer 18608 $3,053,144.23
Bad Boy Shoes 12818 $400,253.31
Wild Hair Shoes 12085 $252,769.26
Big Bob's Shoe Store 14819 $399,011.82
Total Deposit $6,009,285.91
 Apollo Shoes, Inc
Bank Deposit Slip
Twenty First National Bank, Account #604-17-526-5

January 13, 2018

Customer Name Check Number Check Amount

Run For Your Life Shoes 13289 $2,165,500.55
Hip Hop Shoes 14675 $695,542.21
International Soccer Federation 10531 $1,222,359.56
Walk About 13695 $932,653.33
Doug's Shoes 17097 $2,648.75
Custom Shoes 14659 $5,996.13
Blue Bird Shoes 11500 $11,844.63
Pump It Up Shoes 11186 $3,375.54
Hop Scotch Shoes 15820 $895,606.23
Sassy Shoes 19785 $5,765,081.85
Evil Spirit Shoes 15759 $86,450.60
Action Foot Shoes 10716 $793,544.22
Paul Bunion Footware 19851 $10,458,847.58
Shack's Shoe Shine 523 $3,000.00
Lock-Up Shoe Store 16514 $104,503.36
Total Deposit $23,146,954.54

Apollo Shoes, Inc

Outstanding Checks
31-Dec-14
PBC
Check # Date Amount
3583 12/31/2014 9,606.37
3584 12/31/2014 823.27
3585 12/31/2014 7,960.15
3586 12/31/2014 8,533.12
3587 12/31/2014 4,741.30
3588 12/31/2014 14,122.85
3589 12/31/2014 6,707.05
3590 12/31/2014 10,587.77
3591 12/31/2014 7,566.07
3592 12/31/2014 5,684.08
3593 12/31/2014 18,421.90
3594 12/31/2014 12,741.49
3595 12/31/2014 988.55
3596 12/31/2014 10,014.94
3597 12/31/2014 15,746.44
3598 12/31/2014 16,472.00
3599 12/31/2014 12,610.96
3600 12/31/2014 200,000.00
3601 12/31/2014 5,717.19
3602 12/31/2014 6,394.61
3603 12/31/2014 14,766.54
3604 12/31/2014 15,816.16
3605 12/31/2014 4,807.21
3606 12/31/2014 2,794.07
3607 12/31/2014 2,667,006.32
3608 12/31/2014 9,515.15
3609 12/31/2014 1,501.40
3610 12/31/2014 5,929.87
3611 12/31/2014 1,266.85
3612 12/31/2014 4,194.79
3613 12/31/2014 17,205.98
3614 12/31/2014 14,366.46
3615 12/31/2014 12,904.00
3616 12/31/2014 9,338.02
3617 12/31/2014 1,073.73
3618 12/31/2014 13,377.14
3619 12/31/2014 7,841.27
3620 12/31/2014 2,566.30
3621 12/31/2014 11,137.19
Total 3,192,848.56
Document Title : C-2-1

Date : January 28, 2015

To : Darlene Wardlaw
From : Jennifer Babcock
Subject : Apollo Shoes Audit of Accounts Receivable Memo

In regards to our audit of Accounts Receivable, we decided to use both positive and negative
confirmations to verify customer balances as we determined that we could not rely on Apollo's controls
over these accounts. Positive confirmations merely ask the customer to respond to us stating whether
or not their account balance listed is correct. We used this type of confirmation for all customers who
had account balances that were greater than $1,000,000. Negative confirmations ask the customer to
respond only if there is an issue with the account balance listed. We used this type of confirmation for
all customers who had account balances that were $1,000,000 or less. We also asked customers to
confirm their total sales for the year as there were relatively few transactions for each customer to look
at. This process resulted in 6 positive confirmations and 25 negative confirmations having been sent
out.

If we do not receive responses from any of the positive confirmation customers, we will follow up with
a second positive confirmation request. If this second attempt results in no reply from the customer(s)
as well, we will take steps to contract the customers through other means, such as by telephone. We
may also research these customers to make sure that billing and contact information is complete and
accurate.

Of the confirmations that were sent out, we received all six positive confirmations back, along with
one negative confirmation. The findings of each are listed below:

• Neutralizer - Customer's records showed that $1,388.75 more was owed to Apollo than what
was indicated on the positive confirmation. Neutralizer had made out a check to Apollo on
12/28/14 in the amount of $3,053,144.23 for the 10 pallets of shoes that were received.
 • Mall-Warts - Customer stated that they had entered into an involuntary bankruptcy on 11/03/14,
which Apollo was made aware of at that time. Against Mall-Warts' wishes, Apollo sent a large
shipment of shoes to Mall-Wart in late December (including over 1600 pairs of size 23 shoes).
While Mall-Warts believes that the balance listed on the positive confirmation is correct, they
did not place an order for the most recent shipment and cannot currently afford to ship the
goods back to Apollo.
• Run for Your Life Shoes - Customer stated that they had made one purchase from Apollo
during 2014, but that they had paid the entire balance on 01/08/15.
• Tread - Customer stated that they had returned five pairs of defective shoes and had been told
that their account had been credited for the return, which was supposed to be in the amount of
$1,388.75, the current balance listed. Otherwise, total purchases for the year agreed with the
customer's records.
• Paul Bunion Footwear - Customer did not note any problems in regards to the positive
confirmation that they had received.
• Sassy Shoes - Customer stated that they did own the balance listed on the positive confirmation
that was received, but that they had been having some financial difficulties during the year
causing payment to be slowed. They also claimed that payment had been sent on 01/10/15.
• International Soccer Federation - Customer confirmed that the balance listed on their positive
confirmation was correct, but due to issues with the product, did not intent to purchase any
more merchandise from Apollo.

After examining these results, it appears as though there are a couple of issues. The first is that it
appears Neutralizer was (probably) accidentally credited the $1,388.75 that should have been credited
to Tread's customer account. Correcting this error would clear up both of these accounts. Our audit
process has confirmed that a payment was received from Run for Your Life Shoes that paid off their
balance and a payment was also received from Sassy Shoes, however records indicate that they still
have an outstanding balance of $634,000.00. Of larger concern in the fact that Apollo shipped an order
to Mall-Warts in the amount of $5,765,082 on December 28, 2014 after having already been informed
of Mall-Warts' involuntary bankruptcy. As we have been unable to locate a purchase order in relation
to this order, combined with the fact that Mall-Warts states that this is not an order that they place,
raises extreme suspicion. Even more suspicious is the fact that Apollo shipped over 1600 pairs of the
size 23 shoes that they had been having difficulty getting rid of due to the odd size. This large
inventory of size 23 shoes in 2013 resulted in Apollo having to add the balance of this portion of
inventory into their Reserve for Inventory Obsolescence account. Making a large shipment of these
odd sized shoes to Mall-Warts resulted in Apollo reducing this reserve account from $3,012,000 to a
balance of just $846,000. This decision on Apollo's part had a double impact on the financials by
allowing the company to record a full-price sale for this particular inventory and allowed them to
greatly reduced their Obsolescence account, increasing the total value of the inventory account. It
appears that this was an authorized shipment that never should have been recorded as a sale and the
transaction should be voided and the merchandise recovered from Mall-Warts.
Dokumen C-2-2
Neutralizer
1359 Central Boulevard
Derma, MS 39530
Attn: Accounts Payable Dept.

Our auditors, Anderson, Olds, and Watershed, are making their regular audit of our financial statements.
Part of this audit includes direct verification of customer balances.

PLEASE EXAMINE THE DATA BELOW CAREFULLY AND EITHER CONFIRM ITS
ACCURACY OR REPORT ANY DIFFERENCES DIRECTLY TO OUR AUDITORS USING THE
ENCLOSED REPLY ENVELOPE.

This is not a request for payment. Please do not send your remittance to our auditors.

Your prompt attention to this request will be appreciated.

Samuel Carboy
Samuel Carboy, Controller

The balance due Apollo Shoes as of December 31, 2014, is

$3,051,755.48
Purchases from Apollo Shoes during the year 2014 totaled
$3,051,755.48

This balance is correct except as noted below:

Our records indicate that we owe $1388.75 more than indicated above. We wrote a check to Apollo
on 12/28 for $3,053,144.23 for 10 pallets of shoes.

Date: 1/20/2015 By: Rudy Robinson _

Title: _Accounts Payable

Dokumen C-2-3
Mall-Warts
146 Boardwalk Drive
Atlantic City, NJ 08401
Attn: Accounts Payable Dept.

Our auditors, Anderson, Olds, and Watershed, are making their regular audit of our financial
statements. Part of this audit includes direct verification of customer balances.

PLEASE EXAMINE THE DATA BELOW CAREFULLY AND EITHER CONFIRM ITS
ACCURACY OR REPORT ANY DIFFERENCES DIRECTLY TO OUR AUDITORS USING
THE ENCLOSED REPLY ENVELOPE.

This is not a request for payment. Please do not send your remittance to our auditors. Your prompt

attention to this request will be appreciated.

Samuel Carboy
Samuel Carboy, Controller

The balance due Apollo Shoes as of December 31, 2014, is

$20,549,225.88
Purchases from Apollo Shoes during the year 2014 totaled
$122,826,158.60

These amounts are correct except as noted below:

The amounts appear right, but we entered into involuntary bankruptcy on November 3. We told Apollo about this back

at that time. We don’t know why they shipped us so many pairs in late December (including over 1600 pairs of size

23’s that we can’t even give away!)! We didn’t order them and we can’t afford to send them back!

Date: 1/14/2015 By: Action Jackson

Title: _Liquidation Coorinator

Dokumen C-2-4

Run for Your Life Shoes

Attn: Accounts Payable
Dept. 5110 Speedway Drive
Los Angeles, CA 90035

Our auditors, Anderson, Olds, and Watershed, are making their regular audit of our
financial statements. Part of this audit includes direct verification of customer
balances.

PLEASE EXAMINE THE DATA BELOW CAREFULLY AND EITHER CONFIRM

ITS ACCURACY OR REPORT ANY DIFFERENCES DIRECTLY TO OUR
AUDITORS USING THE ENCLOSED REPLY ENVELOPE.

This is not a request for payment. Please do not send your remittance to our auditors.
Your prompt

attention to this request will be appreciated.

Samuel Carboy
Samuel Carboy, Controller

The balance due Apollo Shoes as of December 31, 2014, is

$2,165,500.55
Purchases from Apollo Shoes during the year 2014 totaled
$2,165,500.55

This balance is correct except as noted below:

Yes, we made one purchase from Apollo during the year, but we paid the entire amount
on 1/8/2015.

Date: 1/14/2015 By: __Justin Thompson

Title: _Accounts Payable Coordinator_
 Apollo Shoes, Inc. C-2
Accounts Receivable Aged Trial Balance Prepared by
For Year Ended 12/31/2014 Reviewed by
2014 Conf Date Date Current Past Due 2015 Payments
Net Sales Total Balance Type Mailed Received <30 Days 30-60 Days 60-90 Days >90 Days Received
Pay More Shoes $586.779,54 $526.004,85 $526.004,85
Nuke Me $1.847.819,03 $35.028,59 $35.028,59
Run For Your Life Shoes $2.165.500,55 $2.165.500,55 positive 14-Jan $2.165.500,55
Shoe Shack $3.013.152,09 $730.588,25 $730.588,25
Tread $3.091.017,74 $1.388,75 positive 14-Jan $1.388,75
Mall-Wart $122.826.158,60 $20.549.225,88 positive 14-Jan $5.765.081,85 $14.784.144,03
Wall of Shoes $3.315.585,60 $9.582,25 $9.582,25
Trenchfoot $3.325.046,93 $85.534,25 $85.534,25
Shack's Shoe Shine $3.017.205,21 $4.952,77 $4.952,77
Imelda's Closet $2.942.005,95 $96.452,11 $96.452,11
Hip Hop Shoes $695.542,21 $695.542,21 $695.542,21
International Soccer Federation $3.228.779,92 $1.222.359,56 positive 21-Jan $1.222.359,56
Eight East $3.173.304,14 $45.258,22 $45.258,22
Company B $1.063.564,85 $63.258,65 $63.258,65
Feet Lamour $1.151.561,90 $385.241,02 $385.241,02
Walk About $3.015.119,00 $932.653,33 $932.653,33
Neutralizer $3.053.144,23 $3.053.144,23 positive 20-Jan $3.053.144,23
Doug's Shoes $3.211.903,23 $2.648,75 $2.648,75
Custom Shoes $575.619,27 $5.996,13 $5.996,13
Blue Bird Shoes $271.531,15 $11.844,63 $11.844,63
Bad Boy Shoes $435.286,26 $400.253,31 $400.253,31
Pump It Up Shoes $497.899,04 $3.375,54 $3.375,54
Hop Scotch Shoes $2.779.399,08 $895.606,23 $895.606,23
Sassy Shoes $15.178.041,85 $6.400.081,85 positive 22-Jan $6.400.081,85
Wild Hair Shoes $454.774,74 $252.769,24 $252.769,24
Evil Spirit Shoes $2.109.522,15 $86.450,60 $86.450,60
Action Foot Shoes $1.812.668,55 $793.544,22 $793.544,22
Big Bob's Shoe Store $3.105.982,56 $399.011,82 $399.011,82
Paul Bunion Footware $29.270.632,63 $11.558.847,58 positive 21-Jan $11.558.847,58
Lock-Up Shoe Store $1.499.730,29 $104.503,36 $104.503,36
Other Customers $8.900.342,45 $0,00
Total $231.614.620,74 $51.516.648,73 $24.312.479,27 $4.908.691,85 $7.448.074,93 $14.847.402,68
Document C-3

Date: January 6, 2015

To: Darlene Wardlaw
From: Jennifer Babcock
Subject: Apollo Shoes Allowance for Doubtful Accounts Memo

This memo is intended to address the reasonableness of the Allowance for Doubtful Accounts
for Apollo Shoes Inc, Typically the reasonableness of this account is not assessed by the
external auditors, however, in this case we have reason to doubt the appropriateness of the
value placed on this account for the year ended December 31, 2014.

Bad debt and Allowance for Doubtful Accounts are typically determined based on a
percentage of either sales or total receivables. This percentage should stay relatively
consistent from year to year unless has changed products, credit policies, or its customer
base. Since none of these kinds of changes took place for Apollo, 2014 estimates should be
relatively close to what was used in 2013, unless there are other outside factors that would
influences these accounts. If we determine the Allowance for Doubtful Accounts based on a
percentage of Total Receivables and Bad Debt Expense as a percentage of Total Sales, the
percentages and ratios for 2013 were as follows:

Allowance for Doubtful Accounts = $1,262,819.88 / $16,410,902.71 = 7.70%

Bad Debt Expense = $1,622,425.99 / $246,172,918.44 = 0.66%

A/R Turnover = $246,172,918.44 / $15,148,082.83 = 16.25 times

Days Sales in A/R = $15,148,082.83 / ($246,172,918.44 / 360) = 22.15 days

For 2014, Apollo’s percentages and ratios were as follows:

Allowance for Doubtful Accounts = $1,239,009.75 / $51,515,259.98 = 2.41%

Bad Debt Expense = This account had a zero balance at the end of 2014

A/R Turnover = $242, 713,452.88 / $50,276,250.23 = 4.83 times

Days Sales in A/R = $50,276,250.23 / ($242,713,452.88 / 360) = 74.57 days

These results are indicative of a serious accounts receivable collections issue for Apollo
Shoes. If the Allowance for Doubtful Accounts percentage had remained similar to what was
used in 2013, the estimated used for 2014 would have been around $3,966,675
($51,515,259.98 x 7.70%).

This amount is over three times greater than what was actually used by Apollo. Additionally,
Bad Debt Expense for 2014 could be calculated by using 2013’s percentage to get $1,601,909
($242,713,452.88 x 0.66%). Apollo’s accounts receivable turnover ratio in 2013 was three
times faster than in 2014, and the days sales in accounts receivable ratio shows that customers
were taking three times as long to pay in 2014 as they were in 2013. This may be partially
due to Apollo’s lack of enforcing credit checks on all sales, but could also be due to the
economic slowdown that seems to be occurring.

In addition, Apollo’s largest customer, Mall-Warts, has entered into involuntary bankcruptcy,
resulting in a large outstanding balance that likely won’t be paid. Mall-Warts outstanding
balance consists of $14,784,144.03 that is over 90 days old and the $5,765,081.85 illegitimate
shipment that Apollo sent to Mall-Warts on December 28, 2014, totaling $20,549,225.88 in
all.

In order for Apollo to be accurately reflecting their Allowance for Doubtful Accounts, the
account needs to be adjusted to the base value of $3,966,675 that was calculated using the
same percentage rate of accounts receivable that was used in 2013, plus the $20,549,225.88
balance for Mall-Warts that is currently outstanding. This would result in the 2014 Allowance
Doubtful Accounts total being $24,515,900.88

My recommendation is that Apollo Shoes should make an adjustment to their 2014

Allowance for Doubtful Accounts to reflect these assumptions. If this done, the Allowance
for Doubtful Accounts can be reduced to $18,750,819.03. In addition, I would like to look a
little deeper in the Company B customer as they have an outstanding balance of $63,258.65
that is over 90 days old. While this balance might be small in comparison to some of the
other accounts, I would like to ensure that this customer is a legitimate company. There has
been other sales recorded on this account earlier in the year that have been paid, so the
company could be legitimate and just operating under a very generic name.