Mercado Electronics Company (Merelco) sells electronic gadgets and small appliances to selected retailers throughout the Philippines. Terms are 2/10, n/30. In addition to customer accounts, Merelco's accounts receivable includes employee receivables, customer credit balances, and other non-trade receivables, such as returnable container deposits, utility deposits, and amounts receivable from sale of assets other than inventory. These other amounts are considered material, but no effort is made to identify them separately for either interim or annual financial statement purposes. 1. Identify any internal control weakness present in the company. 2. Which audit assertions are affected in the situation presented? 3. List down possible substantive tests to verify the accounts receivable of Merelco.

Mercado Electronics Company (Merelco) sells electronic gadgets and small appliances to selected retailers throughout the Philippines. Terms are 2/10, n/30. In addition to customer accounts, Merelco's accounts receivable includes employee receivables, customer credit balances, and other non-trade receivables, such as returnable container deposits, utility deposits, and amounts receivable from sale of assets other than inventory. These other amounts are considered material, but no effort is made to identify them separately for either interim or annual financial statement purposes. 1. Identify any internal control weakness present in the company. 2. Which audit assertions are affected in the situation presented? 3. List down possible substantive tests to verify the accounts receivable of Merelco.

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter9: Accounting For Receivables

Section: Chapter Questions

Problem 3MC: If a customer pays with a credit card and the service has been provided, which of the following...

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