1. Reed Johnson designed a classical variables sampling application to examine the accounts receivable for Rose Inc. After considering several possibilities, Johnson decided to use mean-per-unit estimation. The following parameters are noted through a review of Johnson's audit documentation Recorded balance of accounts receivable Number of customer accounts included in accounts receivable balance Risk of incorrect acceptance Risk of incorrect rejection Tolerable misstatement Expected misstatement Standard deviation of audited value Required $800,000 2,000 5% 20% $50,000 $10,000 $52 1. Describe how Johnson would establish each of these parameters 2. What is the appropriate sample size for this application? 3. Assume that Johnson is considering an increase in the necessary level of the risk of incorrect acceptance to 10 percent. How would this increase affect the sample size? 4. Using a 5 percent risk of incorrect acceptance, assume that Johnson determined a $380 average audited value per item and a $50 standard deviation of audited values. Calculate the point estimate for Rose's accounts receivable and the allowance for sampling risk 5. Based on the allowance for sampling risk in (d), provide Johnson's conclusion with respect to Rose's accounts receivable