As Part of the Fieldwork of an Audit Engagement,the Senior

As part of the fieldwork of an audit engagement,the senior on the audit obtained and documented an understanding of the company's internal control relating to accounts receivable and assessed control risk related to accounts receivable at the maximum level.Susan,the staff person assigned to the engagement,requested and obtained from the company an aged accounts receivable schedule listing the total amount owed by each customer as of December 31,year 2,and sent positive confirmation requests to a sample of the company customers.Review Susan's comments on each of the following confirmations and determine the best conclusion and/or follow-up procedures for each item.
Required 1
Confirmation Letter #1
February 1,year 3
Performance Marine Sales,Inc.
1284 River Road
Louisville,Kentucky 40059
Re: Balance at December 31,year 2 - $267,000
Dear Sirs:
As of December 31,year 2,our records indicate your balance with our company as the amount listed above.Please complete and sign the bottom portion of this letter and return the entire letter to our auditors,JS LLP,PO Box 100,Orlando,Florida 32806.
A stamped,self-addressed envelope is enclosed for your convenience.
Sincerely,
Aquatic Jet Products,Inc.
$$\begin{array} { | l | l | l | } \hline \text { The above balance is } & \text { Correct } & \\\hline X & \text { Incorrect (show amount) } & \$ 325,000 \\\hline\end{array}$$
If incorrect,please provide information that could help to reconcile your account.
$$\begin{array} { |l | l| } \hline\text { Signature } & \text { Title } \\\hline & \text { Date } \\\hline\end{array}$$
Response: We placed an order for $58,000 on December 26,year 2.
Susan's note to file:
Per discussion with the controller,the order for $58,000 was shipped FOB shipping point on December 30,year 2,and was received by the customer on January 3,year 3.Therefore,no entry has been made to record the sale in year 2.
Required 2
Confirmation Letter #2
February 1,year 3
West Coast Ski Center,Inc.
163 Tide Avenue
Monterey,California 93940
Re: Balance at December 31,year 2 - $414,000
Dear Sirs:
As of December 31,year 2,our records indicate your balance with our company as the amount listed above.Please complete and sign the bottom portion of this letter and return the entire letter to our auditors,JS LLP,PO Box 100,Orlando,Florida 32806.
A stamped,self-addressed envelope is enclosed for your convenience.
Sincerely,
Aquatic Jet Products,Inc.
$$\begin{array} { | l | l | l | } \hline \text { The above balance is } & \text { Correct } & \\\hline \mathrm { X } & \text { Incorrect (show amount) } & \$ 320,000 \\\hline\end{array}$$
If incorrect,please provide information that could help to reconcile your account.
Response: We made a payment of $94,000 on December 12,year 2.
$$\begin{array} {| l | l |} \hline\text { Signature } & \text { Title } \\\hline & \text { Date } \\\hline\end{array}$$
Susan's note to file:
Per discussion with the controller,the company received the payment of $94,000 on December 15,year 2,and posted it to "Other Income."
Required 3
Confirmation Letter #3
February 1,year 3
Fish & Ski World,Inc.
5660 Ocean Blvd.
Port Arkansas,Texas 78373
Re: Balance at December 31,year 2 - $72,000
Dear Sirs:
As of December 31,year 2,our records indicate your balance with our company as the amount listed above.Please complete and sign the bottom portion of this letter and return the entire letter to our auditors,JS LLP,PO Box 100,Orlando,Florida 32806.
A stamped,self-addressed envelope is enclosed for your convenience.
Sincerely,
Aquatic Jet Products,Inc.
$$\begin{array} { | l | l | l | } \hline \text { The above balance is } & \text { Correct } & \\\hline \mathrm { X } & \text { Incorrect (show amount) } & \$ 613,000 \\\hline\end{array}$$
$\begin{array}{|l|l|}\hline \text { Invoice \#4212 } & \$ 72,000 \\\hline \text { Invoice \#4593 } & \$ 66,000 \\\hline \text { Invoice \#4738 } & \$ 25,000\\\hline\end{array}$
$$\begin{array} {| l | l |} \hline\text { Signature } & \text { Title } \\\hline & \text { Date } \\\hline\end{array}$$
Susan's note to file:
Invoices #4593 and 4738 are not on the A/R aging report at December 31,year 2.
Required 4
Confirmation Letter #4
February 1,year 3
NC Boating Center,Inc.
110 Windward Blvd.
Tierra Verde,Florida 33715
Re: Balance at December 31,year 2 - $239,000
Dear Sirs:
As of December 31,year 2,our records indicate your balance with our company as the amount listed above.Please complete and sign the bottom portion of this letter and return the entire letter to our auditors,JS LLP,PO Box 100,Orlando,Florida 32806.
A stamped,self-addressed envelope is enclosed for your convenience.
Sincerely,
Aquatic Jet Products,Inc.
$\begin{array}{|l|l|l|}\hline\text { The above balance is } & \text { Correct } & \\\hline \mathrm{X} & \text { Incorrect (show amount) } & \$\\\hline\end{array}$
If incorrect,please provide information that could help to reconcile your account.
Response: We cannot determine the balance due at December 31,year 2.
$$\begin{array} {| l | l |} \hline\text { Signature } & \text { Title } \\\hline & \text { Date } \\\hline\end{array}$$
Susan's note to file:
No amount was confirmed on the response letter.
Required 5
Confirmation Letter #5
February 1,year 3
Desert Boats
2135 W.Lane Ave.
Tempe,Arizona 85287
Re: Balance at December 31,year 2 - $60,000
Dear Sirs:
As of December 31,year 2,our records indicate your balance with our company as the amount listed above.Please complete and sign the bottom portion of this letter and return the entire letter to our auditors,JS LLP,PO Box 100,Orlando,Florida 32806.
A stamped,self-addressed envelope is enclosed for your convenience.
Sincerely,
Aquatic Jet Products,Inc.
$\begin{array}{|l|l|l|}\hline\text { The above balance is } & \text { Correct } & \\\hline \mathrm{X} & \text { Incorrect (show amount) } & \$\\\hline\end{array}$
If incorrect,please provide information that could help to reconcile your account.
Response: We paid the entire amount on December 30,year 2.So the balance is completely incorrect.
$$\begin{array} {| l | l |} \hline\text { Signature } & \text { Title } \\\hline & \text { Date } \\\hline\end{array}$$
Susan's note to file:
I found cash recorded as received in the cash receipts journal on January 3,year 3.