Design & Perform Analytical Procedures for accounts in the sale & collection cycle.
Johnson Clock Company sells specialty clocks, watches, and other time-keeping devices. Since its inception, the company hjas sold items through its home office store and at industry and collector trade shows around the country. To meet the demand from collectors around the world, the company began selling items through its Internet Web sits. Recent financial information about Johnson's sales is summarized in the following table.
Year Ended Year Ended Year Ended
12/31/04 12/31/03 12/31/02
Home office $1,279,480 $1,218,552 $1,163,851
Trade show 773,265 739,259 704,391
Internet-based 147,772 122,462 52,884
Home office $25,589 $23,152 $25,605
Trade show 13,946 13,676 12,679
Internet-based 13,254 11,022 4,760
Cost of Goods Sold:
Home office $831,662 $816,429 $768,142
Trade show 491,023 480,518 454,332
Internet-bases 81,275 66,129 28,882
Receivable Related to Sales from:
Home office $126,195 $123,524 $127,545
Trade show 74,149 68,862 67,544
Internet-based 3,239 3,020 1,159
Tolerable misstatement for sales and reveivables is $12,000
Using the information given, design and perform analytical procedures for the sales and collection cycle at Johnson Clock Company Bases on the results of your analytical procedures, describe how the results related to the Interne-based sales differ from the home office and trade show sales.
Auditing is discussed in great detail in this solution.