The Albring Company sells electronics equipment, and has grown rapidly in the last year by adding new customers. The audit partner has asked you to evaluate the allowance for doubtful accounts at December 31, 2011. Comparative information on sales and accounts receivable is included below:

Required
a. Identify what tests of controls and substantive tests of transactions you recommend be performed before conducting your analysis of the allowance for doubtful accounts.
b. Perform analytical procedures to evaluate whether the allowance is fairly stated at December 31, 2011. Assume tolerable misstatement for the allowance account is$15,000.

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Year Ended 12/31/11 S 12,169,876 12/31/10 S10,452,513 1 Accounts Receivable Allowance for doubtful accounts Bad debt charge-offs Accounts Receivable S 695,041 1440381 1,030,933