AUDIT Question

Please provide your answer and calculations in great detail. Thank you in advance for your help!

AP10.8 (LO 8) Challenging Evaluating a PPS sample Assume the following misstatements were found in a PPS sample: Sample Item 1 Book Value $ 650 540 1,900 2,200 Audit Value $ 585 0 2 3 0 4 1,650 5 2.800 2,660 Required a. Calculate the projected misstatement assuming: 1. The sampling interval was $1,800. 2. The sampling interval was $2,000. b. If a risk of incorrect acceptance of 15% is specified in the sample design, the sampling interval is $2,000, and five misstatements are found as enumerated above, calculate: 1. Basic precision 2. The incremental allowance for sampling risk. 3. The upper misstatement limit. c. If tolerable misstatement were $50,000 and expected misstatement were $10,000, what conclusion would you reach based on your results in (b) above