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1 . The auditors are using mean - per unit sampling to evaluate the reasonableness of the book value of the accounts receivable of Mojito,
The auditors are using meanper unit sampling to evaluate the reasonableness of the book value of the accounts receivable of Mojito, Inc. Mojito has receivable accounts with a total book value of $ The auditors estimate the populations standard deviation as being equal to $ After examining the overall audit plan, the auditors believe that the accounts tolerable misstatement is $ and that a risk of incorrect rejection of and a risk of incorrect acceptance of should be used.
Required:
a Calculate the required sample size.
b Now, ignore your sample size calculation in part a and assume that your answer was a sample size of and that you obtained the following results:
Average audited value of items in sample $
Average book value of items in sample $
Sample Standard deviation $
Using meanperunit sampling, calculate the projected misstatement for the population.
c Still using a sample size of using meanperunit sampling, calculate the adjusted allowance for sampling risk and use it to form a statistical conclusion concerning the book value of the population $ That is calculate an interval and either accept or reject the clients book value.
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