Which two of the four accounts payable would you select

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Question - As part of your first audit of the financial statements of Marina del Rey Inc., you have decided to confirm some of the accounts payable. You are now in the process of selecting the individual companies to whom you will send accounts payable confirmation request. Among the accounts payable you are considering are the following:

Company

Amount Payable at Year-End

Total Purchases from Vendor during Year

Dayco, Inc.

$ --

$1,980,000

Gearbox, Inc.

$22,650

$46,100

Landon Co.

$65,000

$75,000

Western Supply

$190,000

$2,123,000

Answer the following:

a. Which two of the above four accounts payable would you select as the most important to confirm? Explain your choice in terms of the audit objectives in sending accounts payable confirmation requests.

b. Assume that you are selecting accounts receivable to be confirmed. Assume also that the four companies listed above are customers of your client rather than suppliers and that the dollar amounts are accounts receivable balances and total sales for the year. Which two companies would you select as the most important to confirm? Explain your choice.

Reference no: EM133168194

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