Maxine Retailing Ltd (Maxine Retailing) is a Melbourne-based company that has been operating in the retailing industry for 30 years. Maxine Retailing purchases electronic equipment and sell them to the public. Due to the expansion of business, Maxine Retailing is seeking a big loan from a bank to buy a new storeroom and office equipment. The bank has requested that Maxine Retailing provide an audited financial report to assist them in considering the company's loan request. The manager of Maxine Retailing has approached your firm for this service and your team has been allocated the task of auditing Maxine Retailing for the year ended 30 June 2020. Your work involves checking the related accounts in the sales and collection cycle.

When checking the sales and accounts receivable accounts of Maxine Retailing, you have noted the following:

-Invoices are issued to customers based on the related customer order and shipping document, and all these documents are pre-numbered. Prices are derived from a list of approved prices and inserted into the invoice for the related product.

-Sales transactions are recorded in the sales journal based on the invoices and shipping document.

-80% of the total sales are made on credit to business customers with the credit term being 45 days. The remaining 20% of the total sales are made to individuals in cash, with a pre-numbered cash receipt being issued each time cash is received.

-In May 2020 few business customers who are on credit requested for an extension of payment.

Required:

(a)For each of the assertions of accuracy, completeness and occurrence, suggest ONE (1) substantive test that you could use to audit Maxine Retailing's sales.(6 marks)

(b)For each of the assertions of existence and accuracy, valuation and allocation, suggest ONE (1) substantive test that you could use to audit Maxine Retailing's accounts receivable.(4 marks)

(c)Assume you have decided to send positive confirmation letters to selected business customers. State any FIVE steps the auditor should perform in undertaking a positive external confirmation for accounts receivables in a financial report audit, based on the requirements of relevant Australian Auditing Standards. Limit your answer to 2 lines for each of the steps.(5 marks)