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In-Line Company Records Accounts Receivable from Customers Arising from Both

question 6

Essay

In-Line Company records accounts receivable from customers arising from both the sale of in-line skates and the provision of repair service.The CA firm of King & King is auditing the financial statements of In-Line Company.Lyon,the audit manager,is aware that the confirmation of customer accounts receivable is a substantive procedure normally used in the audit of accounts receivable.Selected balances from In-Line's financial statements are as follows: accounts receivable,$7,000;current assets,$322,000;total assets,$630,000;shareholders' equity,$570,000;net income,$190,000.
Required:
A)How can Lyon justify deciding not to confirm In-Line's accounts receivable?
B)Briefly describe two types of positive confirmation Lyon could send to In-Line's customers.
C)What alternative procedures can Lyon perform if In-Line's customers fail to respond to the confirmation requests?

Definitions:

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Lisa Diamond

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