Ashgrove Garden Supplies Co sells garden tools, furniture and barbecues to garden centres on credit and, since this year, to the public through its own website. You are an audit senior at Quayle & Bose, planning the audit for the year ending 31 December 2026; Ashgrove Garden Supplies Co is a new audit client this year. It is not listed. The finance director has provided the forecast figures for 2026 below (from the management accounts to 31 October 2026 and her forecast for November and December), with the audited figures for 2025.

Ratios for 2025: gross profit margin 29.8%, inventory holding period 69.2 days, receivables collection period 45.2 days, trade payables payment period 56.1 days. 1. Online sales. The website opened on 1 March 2026. Customers pay by card when they order, and the goods are delivered three to five days later. Ashgrove Garden Supplies Co records the revenue when the payment is received. 2. Credit terms. To win new garden centre customers, Ashgrove Garden Supplies Co extended its credit terms from 30 days to 60 days on 1 April 2026. 3. Barbecues. In September 2026 Ashgrove Garden Supplies Co bought 6,000 barbecues for $780,000 to obtain a bulk discount. At 31 October 2026, 4,500 were unsold. 4. Kelby warehouse. A second warehouse at Kelby opened in June 2026. Goods are moved between the two warehouses each week. Inventory will be counted at both warehouses on 31 December 2026. 5. Discounts. From 1 January 2026 garden centres that buy more than $200,000 of goods in a year receive a 5% discount on all of that year's purchases. Purchase prices from suppliers were broadly unchanged in 2026. 6. Finance. The company's cash of $1,100,000 at the end of 2025 is forecast to become an overdraft of $900,000 at the end of 2026. The overdraft facility of $1,500,000 is due for renewal in March 2027. 7. Staff. The financial controller left in August 2026 and has not been replaced. The finance director now prepares all the month-end journals herself.