Problem

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C

$-$

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The auditors of Kansas Corporation wish to use a structured approach to nonstatistical sampling to evaluate the reasonatbleness of the

accounts receivable. Kansas has

$3$

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$,$

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$0$

$0$

$$receivable accOunts with a total book value of $

$5$

$,$

$1$

$2$

$0$

$,$

$0$

$0$

$0$

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$$The auditors have assessed the

combined level of inherent and control risk at a moderate level and believe that their other substantive procedures are so limited as to

requirea "maximum risk assessment.

After considering the overall audit plan, the auditors believe that the test's tolerable

misstatement is $

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$5$

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$$Refer Eigure

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$1$

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Required:

a

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$$Calculate the required sample size.

b

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$$Assuming the following results:

ces

Number of items in sample

$2$

$3$

$0$

Total audited value of sample items

$

$3$

$2$

$,$

$8$

$0$

$0$

Total book value of sample items

$

$3$

$5$

$,$

$2$

$0$

$0$

$($

$1$

$)$

$$Use the ratio estimation method to calculate the projected misstatement of the population.

$($

$2$

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$$Use the difference estimation method to calculate the projected misstatement of the population.

c

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$$Use the results of ratio estimation method and difference estimation method to arive at a conclusion as to whether to accept" or

"reject" the population.

Complete this question by entering your answers in the tabs below.

Req C

Req B

$2$

Req A

Req B

$1$

Calculate the required sample size.