Questions 2, 3, 4, 5 and 6 are based on the following information. Edwards has decided to use probability proportionate to size (PPS) sampling in the audit of a client's accounts receivable balance. Edwards plans to determine the sampling interval by dividing tolerable misstatement by an appropriate confidence factor. Few, if any, account balance overstatements are expected. | Edwards plans to use the following PPS sampling table: Number of overstatements 1% Risk of Incorrect acceptance 5% 10% 15% 0 20% 4.6 3.00 2.31 1.90 5.6 1.61 1.75 3.89 3.38 3.4 3.00 6.30 5.33 4.72 4.28 The following information was also available: Tolerable misstatement $15,000 Risk of incorrect acceptance 5% Recorded amount of accounts receivable $300.000 Three overstatements were discovered in a PPS sample: Recorded amount Audit amount $400 2nd $320 3 rd 500 0 3,000 2,500 2 Edwards should use a sampling interval of a) 20,000 b) 15,000 c) 10,000 d) 5,000 3 Edwards should use a sample size of a) 60 b) 50 c) 40 d) 30 4 Assume that the sampling interval is $1,000. What is the total projected misstatement given the three misstatements discovered? a) 1,750 b) 1,700 c) 1,200 d) 1,000 5 Assume that the sampling interval is $1,000. The projected misstatement plus the incremental allowance for sampling risk is: a) 2,400 b) 2,560 c) 2,060 d) 3,800 sample? 6 Assuming a sampling interval of $1,000, what is the upper misstatement bound based on this a) 1,700 b) 3,000 c) 5,560 d) 5,790