In the confirmation of accounts receivable for the Reliable ServiceCompany, 85 positive and no negative confirmations were mailed to customers. Thisrepresents 35% of the dollar balance of the total accounts receivable. Second requestswere sent for all nonresponses, but there were still 10 customers who did not respond.The decision was made to perform alternative procedures on the 10 unansweredconfirmation requests. An assistant is requested to conduct the alternative proceduresand report to the senior auditor after he has completed his tests on two accounts. Heprepared the following information for the audit files:1. Confirmation request no. 9Customer name—Jolene Milling Co.Balance—$3,621 at December 31, 2013Subsequent cash receipts per theaccounts receivable master file: January 15, 2014—$1,837January 29, 2014—$1,263February 6, 2014—$1,4292. Confirmation request no. 26Customer name—Rosenthal Repair ServiceBalance—$2,500 at December 31, 2013Subsequent cash receipts per theaccounts receivable master file February 9, 2014—$500Sales invoices per the accounts receivablemaster file (I examined the duplicate invoice) September 1, 2013—$4,200a. If you are called on to evaluate the adequacy of the sample size, the type of confirmation used, and the percent of accounts confirmed, what additional information willyou need?b. Discuss the need to send second requests and perform alternative procedures fornonresponses.c. Evaluate the adequacy of the alternative procedures used for verifying the two nonresponses

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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In the confirmation of accounts receivable for the Reliable Service
Company, 85 positive and no negative confirmations were mailed to customers. This
represents 35% of the dollar balance of the total accounts receivable. Second requests
were sent for all nonresponses, but there were still 10 customers who did not respond.
The decision was made to perform alternative procedures on the 10 unanswered
confirmation requests. An assistant is requested to conduct the alternative procedures
and report to the senior auditor after he has completed his tests on two accounts. He
prepared the following information for the audit files:
1. Confirmation request no. 9
Customer name—Jolene Milling Co.
Balance—$3,621 at December 31, 2013
Subsequent cash receipts per the
accounts receivable master file: January 15, 2014—$1,837
January 29, 2014—$1,263
February 6, 2014—$1,429
2. Confirmation request no. 26
Customer name—Rosenthal Repair Service
Balance—$2,500 at December 31, 2013
Subsequent cash receipts per the
accounts receivable master file February 9, 2014—$500
Sales invoices per the accounts receivable
master file (I examined the duplicate invoice) September 1, 2013—$4,200
a. If you are called on to evaluate the adequacy of the sample size, the type of confirmation used, and the percent of accounts confirmed, what additional information will
you need?
b. Discuss the need to send second requests and perform alternative procedures for
nonresponses.
c. Evaluate the adequacy of the alternative procedures used for verifying the two nonresponses

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