In selecting which customer balances to detail test via accounts receivable confirmations, assume that you have decided to direct test only the minimum number of customer accounts required; that is, you will direct test only customer accounts that are greater than tolerable misstatement, and you will use audit sampling to test the remainder of the population. You can find the accounts receivable detail listing at www. pearsonhighered. com/beasley6e. As noted there, Hooplah has a total of 357 customers, with an accounts receivable balance totaling $12,881,551. Based on the engagement team’s knowledge of Hooplah’s accounts receivable processes and policies, experience in prior year’s audits, and the results of tests of controls and substantive analytical procedures, the assessment of risk of material misstatement for accounts receivable has been set at "moderate." Prepare a schedule that includes the following: a. List the customer number and related balance for all customers you plan to direct test.
b. Indicate your computed sample size (using the sample size formula provided). Provide supporting calculations and justification for your sample size, including justification for the confidence factor and the level of expected misstatement you used to compute your sample size.