Question

Ming, CPA, is engaged to audit the financial statements of Wellington Sales, Inc., for the year ended December 31, 20X0. Ming obtained and documented an understanding of the client’s business and environment, including internal control over business processes relating to accounts receivable. She assessed the risks of material misstatement for the assertions of existence, rights, and valuation of accounts receivable at a high level. Ming requested and obtained from Wellington an aged accounts receivable schedule listing the total amount owed by each customer as of December 31, 20X0, and sent positive confirmation requests (signed by Sam Blocker, the controller of Wellington). Ming has asked Zimber, the staff assistant assigned to the engagement, to follow up on the nine returned confirmations that appear on the following two pages. Assume that each confirmation is material if the potential misstatement is projected to the population. Also, assume that in all cases the debit balance is the result of a credit to “Sales.” In several circumstances, a “Note to files” is included with additional information relating to the confirmation.
Describe the procedure or procedures, if any, that Zimber should perform to resolve each of the nine confirmations (below) with exceptions that were returned and, if possible, provide the audited value of the account. Assume that all amounts involved are considered material.
Confirmation #5
The statement of our account showing a balance of $20,000 due Wellington Sales, Inc., at December 31, 20X0, is correct except as noted below:
Abbington Co.
By Alfred Martin
Date: 1/16/X1
Exceptions: Yes, we ordered $20,000 worth of merchandise from Wellington in November. However, we mailed Wellington a check for $20,000 on 12/18/X0.
Note to files: Blocker indicates that the check was received and deposited on 12/28/X0, but posted to the wrong customer’s account.

Confirmation #22
The statement of our account showing a balance of $12,222 due Wellington Sales, Inc., at
December 31, 20X0, is correct except as noted below:
Wilson Dilco
By Kent Parry
Date: 2/2/X1
Exceptions: No way. Forget it. Wellington said we’d have these goods in 10 days on December 2. When we didn’t receive them, I canceled the order on December 12th. Wiggo Smiggo Corporation shipped us similar goods overnite. We’ll never deal with Wellington again as long as I am around.

Confirmation #47
The statement of our account showing a balance of $22,000 due Wellington Sales, Inc., at
December 31, 20X0, is correct except as noted below:
The Big Edge
By Bert Quinton
Date: 1/22/X1
Exceptions: We use a voucher system by individual invoice. We cannot verify the balance, but
Wellington is one of our regular suppliers. We probably owe them something.

Confirmation #51
The statement of our account showing a balance of $75,000 due Wellington Sales, Inc., at
December 31, 20X0, is correct except as noted below:
Farkele Corporation of America and the World
By Robby Boertson
Date: 1/9/X1
Exceptions: Our records show that we sent them a check for the amount due on 12/29/X0.

Confirmation #62
The statement of our account showing a balance of $2,500 due Wellington Sales, Inc., at
December 31, 20X0, is correct except as noted below:
Pibson Gonker Corporation
By Sam Sheffield
Date: 1/30/X1
Exceptions:
Note to files: This confirmation was returned by the postal service as “return to sender, address unknown.”

Confirmation #68
The statement of our account showing a balance of $66,000 due Wellington Sales, Inc., at December 31, 20X0, is correct except as noted below:
Yanrarian Ruckus Company
By Tom Turken
Date: 2/7/X1
Exceptions: We mailed that check for the full amount on 1/3/X1. The merchandise was not received until 12/23/X0.

Confirmation #72
The statement of our account showing a balance of $22,000 due Wellington Sales, Inc., at December 31, 20X0, is correct except as noted below:
Yeg Co.
By Alfred Martin

Date: 1/30/X1
Exceptions: Yes, I guess we owe this amount, but Wellington made clear to us that we could return any of the items we did not sell. But, so far, sales are good, and we’ve sold most of the items.

Confirmation #77
The statement of our account showing a balance of $32,000 due Wellington Sales, Inc., at
December 31, 20X0, is correct except as noted below:
Zell Incorporated
By John Nolan
Date: 1/19/X1
Exceptions: We received $24,000 worth of goods on consignment from Wellington on 2/10/X0, but they are not sold yet.

Confirmation #79
The statement of our account showing a balance of $42,000 due Wellington Sales, Inc., at December 31, 20X0, is correct except as noted below:
Zentigton Corporation
By Wallace Olson
Date: 1/22/X1
Exceptions: Yes, we ordered $42,000 of merchandise on October 15, but Wellington was out of stock until recently. They seem to always be out of stock. We finally received the goods on January 4, 20X1.



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  • CreatedOctober 27, 2014
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