Sherwood Textiles, a listed company, manufactures knitted clothes and dyes these clothes and other textiles. You are carrying out the audit of the accounts of the company for the year ended 30 September 20X6 which show a revenue of about $10 million and a profit before tax of about $800,000. You are attending the final audit in December 20X6 and are commencing the audit of trade accounts receivables, which are shown in the draft accounts at $2, 060,000. The interim audit (tests of control) was carried out in July 20X6 and it showed that there was a good system of internal control in the sales system and no serious errors were found in the audit tests. The company's sales ledger is maintained on a computer, which produces at the end of each month: (i) A list of transactions for the month (ii) An aged list of balances (iii) Open item statements which are sent to customers. (Open item statements show all items which are outstanding on each account, irrespective of their age) Required (a) List and briefly describe the audit tests you would carry out to verify trade accounts receivable at the year-end. You are not required to describe how you would carry out a direct confirmation of receivables. (b) Describe the audit work you would carry out on the following replies to a receivables' circularisation: (i) Balance agreed by customer (ii) Balance not agreed by customer (iii) Customer is unable to confirm the balance because of the form of records kept by the customer (iv) Customer does not reply to the confirmation letter