Required information

***PLEASE NOTE*** I HAVE FILLED IN THE INVOICE AMOUNTS FROM A/R CONFIRMATIONS FROM ALL FOUR CUSTOMERS. I AM REALLY STRUGGLING WITH THE BOTTOM THREE AREAS.

In this mini-case you will complete the test of details on accounts receivable for the 2016 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 Level95%, Tolerable Misstatement$600,000, and Expected Misstatement$154,440. Based on these inputs, 68 accounts receivable balances were selected for confirmation requests. The first 64 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.

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?

EARTHWEAR CLOTHIERS Evaluation of A/R Confirmations December 31, 2016

Results of A/R Confirmations

Complete the worksheet below by reviewing the accounts receivable confirmation file contained in the Instructions. If you determine that the difference noted by the customer is a misstatement, record the amount of difference in the "Amount of Misstatement" column. (Round all answers to 2 decimal places except for Projected misstatement and A/R balance per customer, which should be rounded to the nearest whole number. Leave no cell blank - Be sure to enter "0" wherever required.)

Customer ID	Customer Name	A/R Balance per clients' records		A/R Balance per Customer	Difference per Customer	Reason(s) for Difference (i.e., timing difference, transposition error, cut-off error, mistake, etc.)	Amount of Misstatement
652-54310	Red Star Health Group	$	12,365	$ 12,356	$ 9	transposition error	$9
210-38725	Museum of Flight	$	14,235	$ 0	$ 14,235	cut-off error	$14,235
254-62418	Summit Hills Country Club	$	24,362	$ 21,520	$ 2,842	timing difference	$0
179-26343	Central States Hotels	$	18,642	$ 15,642	$ 3,000	mistake	$3,000
64 additional items		$	880,560	$ 880,650	$ 0		$ 0
Total Dollar Amount of Items in Sample		$	950,164			Net misstatement	$17,235
						Total Dollar Amount of Items in Sampling Population	$ 7,722,000

Nonstatistical Evaluation of Errors

Amount of Misstatement		Ratio of Misstatements in Sample	Projected Misstatement	Evaluation of Test Results
$		%	$

Statistical Evaluation of Errors using IDEA Monetary Unit Sampling

	Item	Error	Most Likely Error	Upper Error Limit	Evaluation of Test Results
Basic Precision
		Totals

Evaluation Method Comparison