Answer:
Please find the detailed answer as follows:
Explanation:
1. Preliminary analytical review is performed to gain the understanding of business and enviornment. Purpose of analytical review in preliminary phase of audit is that if auditor finds a huge difference with previous year figure, then auditor examine deeply. If amounts/ratios are similar to previous year then auditor can check randomly.
2. There are two possible situations. One is analytical test and another is substantive test. Examine with ratos and accounting tools is analytical test and detail study is called substantive test. In substantive test auditor collect the detail evidences.
3. Estimated sales of year 2 is $1.200.000+10%= $1.320.000 (Increase 10% from previous year sales)
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Actual sales = COGS*100/53.87756
792.000*100/53.87756= $1470000
Expected discrepency = recorded sales- actual sales
1.320.000-1.470.000= -$150.000
Account recievable turnover ratio = Credit sales/Average recievable
8.16666=1.470.000/Average receivable
Average recievable = $180.000
Average recievable = opening recivable + closing recievable/2
180.000 = 100.000+ closing receivable/2
closing receivable = $260.000
Unaudited account recievable = 1.320.000/12= $110.000
Discrepency in account recievable = 110.000-260.000= $150.000
There is under statement because acyual sales is greater than estimated sales.
