Need help on part A) 1,2,3 also part B)1,2,3

Cloud 9 - Continuing Case Assume that you are preparing to confirm accounts receivable at December 31, 2022, which is one month prior to the fiscal year- $30,500, as a shipment of shoes was not received until end of January 31, 2023. The book value of gross accounts receiv- January 2, 2023. Further investigation showed that the cus- able is $71,622,804. Complete the following requirements related tomer ordered the goods on December 31, 2022, and they to the confirmation of receivables for Cloud 9 based on previous were not counted in inventory when the inventory was taken work and the following information. on that date. The freight carrier came by late in the day and picked up the goods, even though the warehouse was Required normally shut down for inventory on December 31, 2022. a. Using PPS sampling, determine the sample size that you The goods were shipped FOB shipping point. The receiv- want to use for sending accounts receivable confirmations. able was paid in full on January 29, 2022. Draw on the information you learned about PPS sampling in . Customer No. 00651 disputed receivables in the amount of Chapter 10. The book value of accounts receivable before the $250,750, as it had been paid on December 30, 2022. The allowance for doubtful accounts is $71,622,804. You make check from Customer No. 00651 was received and depos- the following assumptions: ited by Cloud 9 on January 3, 2022. The book value of the receivable for Customer No. 00651 at December 31, 2022, . You set tolerable misstatement for accounts receivable at was $250,750. $3,500,000. . Customer No. 00850 disputed the balance on the confirma- . Expected misstatement = $750,000. tion of $35,700 in its entirety. Further investigation showed . Risk of incorrect acceptance = 37%. that the balance was charged to the wrong customer. Goods were shipped to Customer No. 00580. On January 3, 2022, Given these parameters: the error was discovered. A credit memo was issued to Cus- 1. What do you believe to be appropriate qualitative assump- tomer No. 00850 and an invoice was sent to Customer No. tions for inherent risk and control risk given the risk of 00580, which was paid in full on January 27, 2022. incorrect acceptance used? . No response was received from Customer No. 10141. 2. What do you calculate for sample size? Goods in the amount of $944,232 were shipped on Novem- 3. What do you calculate for sampling interval? ber 1, 2022. Additional goods in the amount of $131,824 were shipped on December 12, 2022. The receivable bal- b. After discussion of the sample size with Josh Thomas, the audit ance was $1,076,056 at December 31, 2022. A review of the team sets tolerable misstatement at $3,000,000, expected mis- cash receipts journal showed that a check for $944,232 was statement at $1,750,000, and risk of incorrect acceptance at deposited on January 24, 2022. Another check for $131,824 37%. You use a sample size of 73 confirmations. The sampling was received on February 1, 2023. interval is $981,134. You may assume that except for the follow- Customer No. 21287 disputed receivables in the amount ing, you received confirmations from customers that showed of $755 claiming that it did not receive a promised 1% dis- no exceptions. Determine whether the following conditions count associated with the first shipment to a new customer. represent errors for purposes of your evaluation. Based on your The book value of the receivables for Customer No. 21287 evaluation and the parameters of the sample you designed at December 31, 2022 was $75,500. The customer subse- above, evaluate the result of confirming accounts receivable. quently paid $74,745 on January 29, 2022, and Cloud 9 Customer No. 00030 disputed the price on stock number issued a credit memo in the amount of $755. 11205, which was priced at $75 per item and should have 1. Determine the amount of misstatement for each cus- been priced at $60 per item on 1200 items. Cloud 9 issued a tomer listed above. credit memo for $18,000 on January 7, 2023. The book val- 2. Determine the upper misstatement limit. ue of the receivable for Customer No. 00030 at December 3. Draw a conclusion about whether the existence 31, 2022, was $130,500. assertion for accounts receivable is presented fairly at Customer No. 00158 with a receivable balance of $730,225 December 31, 2022. on December 31 disputed receivables in the amount of