Please complete the test of details on accounts receivable for the 2019 audit of EarthWear Clothiers, Inc. The principal test of detail involves sending "confirmations" or letters to customers so that they can confirm that they owe EarthWear the reported balance. All six customer accounts receivable balances exceeding $100,000 were targeted for testing. These six balances, aggregated total of $921,000, were confirmed without exceptions. The remaining accounts are of similar size and total $7,722,000 and will be tested via audit sampling. Inputs for the sample size determination were, Desired Confidence Level--95%, Tolerable Misstatement--$600,000, and Expected Misstatement--$154,440. Based on these inputs, 67 accounts receivable balances were selected for confirmation requests. The first 63 accounts receivable confirmations have already been reviewed by other staff members and no errors have been found. The remaining four confirmations require your review as they were returned with notes from customers indicating a potential misstatement. Please note that legitimate timing differences do not result in misstatements.

INSTRUCTIONS: 1 Review the four confirmation responses in the PDF file downloaded from the mini-case website (a link is also provided below). Enter the information into Work Paper 10-1. For each confirmation response, please determine whether the difference noted by the customer represents a misstatement or a timing difference. After reviewing all four confirmations, please complete both the nonstatistical and the statistical evaluation options outlined on Work Paper 10-1 unless your instructor tells you otherwise. Chapter 9 of the text provides guidance on both nonstatistical and statistical evaluation. Please refer to Chapter 9 for a description of how to calculate a sample size and evaluate errors using IDEA. Fields you are to complete on work papers are colored yellow. The color will disappear when the field is completed. You should download the PDF files required to complete this case from Connect or the EarthWear Mini-cases section of the Additional Student Resources guide: http://www.mhhe.com/messier1 1e 2 After completing both the nonstatistical and statistical evaluation methods, please briefly discuss how the results compare to each other in the space provided on Work Paper 10-1. Are the monetary amounts and overall conclusions similar? 3 When you are finished evaluating the sample results, enter your initials in the yellow box in the upper right-hand corner of Work Paper 10-1 (box indicates "Initial Here"). 4 Please input your answers into Connect or print a hard copy of Work Paper 10-1 to submit unless your instructor requests an electronic submission. The work paper is formatted to fit on one page. CONNECT INPUT nput your responses from Work Paper 10-1 into the corresponding questions in Connect.EARTHWEAR CLOTHIERS 10-1 Evaluation of A/R Confirmations Initial Here December 31, 2019 11/10/20 Results of AIR Confirmations Complete the worksheet below by reviewing the accounts receivable confirmation file contained in the Instructions. Complete the cells below in yellow. If you determine that the difference noted by the customer is a A/R Balance per A/R Balance per Difference per Reason(s) for Difference Amount of Customer ID Customer Name clients record Customer Customer (Le., timing difference, transposition error, cut-off error, mistake, etc.) Overstatement 652-54310 ....red Star Health Group..................... Enter Amount "wave ofany misstatementhere. Ifnone, enter 0. 210-38725..Museum of..!..... .254-62418. .. - 595953595459595954595959595"*24:gran misstatementhere. Ifnone, enter 0. Summit Hills Country Club (125959596.20Tany misstatementhere. Ifnone. enter 0. 172-26343..Central States.Hotels......... ..40362 Enter Amount... .39842 MenacAmen!.............. ".We Ofany misstatementhere. Ifnone, enter 0. 63 additional items $880,560 880 560 "...........26813 reason@.fordiffaranea.mef2............. SO $0 Total Dollar Amount of Items in Sample $950.164 $880,560 50 Net misstatement 50 Total Dollar Amount of Items in Sampling Population $7,722,000 Nonstatistical Evaluation of Errors Book Value Book Value Known of Factual Ratio of Projected Stratum of Stratumn of Sample Misstatement Misstatements in Misstatement" Evaluation of Test Results >$100,000 $921,000 $921,000 0.0000% so Enter Evaluation Here