Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Q4. Sampling Terri Sampson is auditing the accounts receivable of Bikkely Ltd for the year ended 30th June 2020. Bikkely's accounts receivable balance was recorded

image text in transcribed
Q4. Sampling Terri Sampson is auditing the accounts receivable of Bikkely Ltd for the year ended 30th June 2020. Bikkely's accounts receivable balance was recorded at $8,500,000 and comprised more than 2,000 customer accounts. However Bikkely's 10 largest customer balances comprised a high percentage of the recoded accounts receivable (more than $1,500,000 or 30%). As a result, Terri is considering using Dollar Unit Sampling. Based on prior audits and other judgments, Terri has established the following parameters: Risk of Incorrect Acceptance 10% Tolerable Error $335,000 Expected Error $180,000 Required a. Determine the required sample size that would be used by Terri in the audit of Bikkely Ltd. Explain how you arrived at this sample size - marks will be based on your workings/logic/approach, as well as the sample size specified. b. Calculate the sampling interval - show all workings. c. In your own words explain the concept of tolerable error in dollar unit sampling - this must be written in your own words. [6+2 +2 = 10 Marks)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Financial Accounting For School Administrators Tools For School

Authors: Ronald E. Everett, Donald R. Johnson, Bernard W. Madden

3rd Edition

1610487710, 978-1610487719

More Books

Students also viewed these Accounting questions