Problem 1

Assume that an accounting has the following characteristics:

Number of items in the account - 500

Recorded amount - $1,000,000

Sample size - 50

Recorded amount of the sample - $90,000

Required:

a. If ratio estimation is used and the audited value of the sample is 80,000, the estimate of the account total is $_______________.

b. If difference estimation is used and the audited value of the sample is $105,000, the estimate of the account total is $______________.

c. If the audited value of the sample is $ 95,000 and mean estimation is used, the estimate of the account total is $_______________.