For each situation below, specify the evidence mix that you would use (tests of control, substantive tests, type of confirmation/timing), with respect to the audit of accounts receivable and sales and explain why.

A. The client is in a rapidly changing and evolving industry, the products they sell can quickly become obsolete. Total accounts receivable is $65 million with a bad debt allowance of $7 million. The company has recently laid off three accounting staff to save money.

B. A small company has 55 different customers with balances ranging from $750 to $25 000 per customer. There is one accountant on staff and a professional accountant comes in once per week for three hours to review the staff accountant's work and prepare journal entries. Bad debts are rare, as the owner is actively involved in accounts receivable collection.