In the audit of Price FairPrice Fair Company for the year ended September 30, the auditor set a tolerable misstatement of

$15,000 at an ARIA of 15%. A PPS sample of 100 was selected from an accounts receivable population that had a recorded balance of $2,005,000. The following table shows the differences uncovered in the confirmation process:

Requirements

a. Calculate the upper misstatatement bound on the basis of the client misstatement in the sample.

Accounts Receivable per Records Accounts Receivable per Confirmation Follow-up Comments by Auditor Pricing error on two invoices Custom m iled check 9/26; company received check 10/3. Merchandise returned 9/30 and counted in inventory; credit 1. $ 2,585.00 $ 2,357.00 2. $5,650.00 3. 3,680.00 $ 1,680.00 was issued 10/6 Footing error on an invoice Goods were shipped 9/28; customer received goods on 10/2 4. $ 940.00 $ 910.00 5. $ 520.00 6. 3,005.00 $ 7. $ 1,360.00 sale was recorded on 9/28 Pricing error on a credit memorandum. Goods were shipped on 9/29; customer received goods 10/3 2,995.00 sale was recorded on 9/30 Mistatement Misstatement/ Item 1. 2. 3. 4. Misstatement? Amount Recorded Amount 6. 7. Complete the table below to compute the upper misstatement bound. Begin by calculating the amounts needed to calculate the overstatement bound and then, cal: aks the ati, basae: p ::cata lfI ttl ut 3:2 filesinitsete it hoNid. Enter the tainting proportion to three dec mals places, X X Enter the incremental change in confidence factor to two decimal places, X.. Round all other amounts to the nearest whole dollars. Leave unused cells blank.) Projected Misstatement ncremental Plus Incremental Change in Allowance for Tainting Interval Misstatement Confidence Factor Sampling Risk Totals Add basic precision Upper misstatement bound