1. Allister is auditing a clients accounts balance recorded at $500,000 using monetary unit sampling and determined a sample size of 100 items. The following two misstatements were identified as a result of the substantive tests:

Recorded Balance	Audited Amount
$4,000	$1,000
$2,000	$1,500

Confidence factors for a 5 percent risk of incorrect acceptance are shown below:

Overstatement Errors	Factor
0	3.00
1	4.75
2	6.30

What is the incremental allowance for sampling risk?

1. $3,500
2. $5,000
3. $8,500
4. $15,000