You are performing work to address the moderate risk of material misstatement for the existence of accounts receivable by performing accounts receivable confirmations. Total accounts receivable at year-end was $2,500,000. Based on professional judgment, 100% of balances over $30,000 were confirmed. The remaining book value is the population of representative items, from which a random sample was selected in accordance with CAS 530.

 

Required:

Analyze the results and draw conclusions.

The results of the confirmations are compiled below: Book value $ 35,000 40,000 35,000 62,500 50,000 30,000 72,000 $324,500 High-value items Jean's Pub Georgio's Oceanic Libations Morty's Lounge and Venue Nosh Zhen Lounge Total Representative items* Chili Pepper Prana Millicent's Caf Devonshire $ 6,000 2,000 1,500 1,000 Audit value $35,000 40,000 35,000 62,500 42,500 30,000 72,000 $ 5,200 1,800 Misstatement $7,500 $ 800 200 1,500 1,000 * 50 items were sampled, with a total book value of $450,000. Only those where the audit value did not equal the book value are listed in the results. Performance materiality is $50,000.