ge 1: Question 1 (13 points) Evaluating Audit Evidence Chong Inc. ge 2: You are auditing the Chong Inc. company for their recently completed fiscal year. In examining their Accounts Receivable, you are attempting to use Audit Sampling to project a Likely Aggregate Misstatement ("LAM") for the balance for Accounts Receivable in Chong management's draft financial statements. age 3 3 "age 4 4 Note that the Accounts Receivable sub-ledger balances to the Accounts Receivable Control Account, so that is not an issue for you. In your investigation, you have found the following: All Accounts Receivable in the sub-ledger: 15,000: total number of customer accounts $8,000,000: total dollar value of Accounts Receivable recorded in Chong Inc.'s accounting system In the Sample of the Accounts Receivable: 1,000: total number of customer accounts sampled $500,000: total dollar value of those sampled customer accounts recorded in Chong acer O A # 3 $ 4 % 5 & 7 6 8 9 0 e r t u S d f g h .. X V b n m alt ctrl 1: In the sample of the Accounts Receivable: 1,000: total number of customer accounts sampled $500,000: total dollar value of those sampled customer accounts recorded in Chong Inc.'s accounting system. $4,000: total dollar value of the misstatements found in the sample. e 2 It has been decided that the materiality level for a material misstatement is $80,000. e 3: REQUIRED: [A] Calculate the Likely Aggregate Misstatement using the RATIO Method (students must show calculations in their written responses). [B] Calculate the likely Aggregate Misstatement using the DIFFERENCE Method (students must show calculations in their written responses) ge 4: [C] Do you think there is a material misstatement in Chong Inc.'s Accounts Receivable balance? Explain why or why not with reference to both Methods of calculating a Likely Aggregate Misstatement, acer DI O O # $ 4 3 % 5 A 6 & 7 8 9 0 w e r t u O u d f g h k v b n alt ctrl