Rachel Robertson wishes to use mean-per-unit sampling to evaluate the reasonableness of the book value of the accounts receivable of Smith, Inc. Smith has 11,000 receivable accounts with a total book value of $1,580,000. Robertson estimates the population's standard deviation to be equal to $30. After examining the overall audit plan, the auditors believe that the account's tolerable misstatement is $54,000, and that a risk of incorrect rejection of 10 percent and a risk of incorrect acceptance of 20 percent are appropriate. Use Figure 98 Required: a. Calculate the required sample size. (Do not round any division. Round other computations and the final answer to the next whole number.) Assuming the following results Book value of items in sample-5148 Average audited value of items in sample=$140 Standard deviation of sample - $32 b. Use the mean perunt method to (Do not round any division. Round other computations and the final answers to the nearest whole value.) (1) Calculate the point estimate of the accounts audited value Et Required information (2) Calculate the projected misstatement for the population. Answer is complete but not entirely correct. Projected misstatement 7,000 (3) Calculate the adjusted allowance for sampling risk. Answer is complete but not entirely correct. Adjusted allowance for sampling risk s 17,393 Rachel Robertson wishes to use mean-per-unit sampling to evaluate the reasonableness of the book value of the accounts receivable of Smith, Inc. Smith has 11,000 receivable accounts with a total book value of $1,580,000. Robertson estimates the population's standard deviation to be equal to $30. After examining the overall audit plan, the auditors believe that the account's tolerable misstatement is $54,000, and that a risk of incorrect rejection of 10 percent and a risk of incorrect acceptance of 20 percent are appropriate. Use Figure 9.8 Assuming the following results: Book value of items in sample = $148 Average audited value of items in sample - $140 Standard deviation of sample - $32 Required: a. Use the ratio method to calculate: (The solution from 9-42 is required in order to complete 9-43.) (Do not round intermediate calculations. Round your answers to the nearest whole dollar) Answer is complete but not entirely correct. (1) (2) Projected misstatement Estimated total audited value LUCU VURUL HISH- Required information neYuuu a. Use the ratio method to calculate (The solution from 9-42 is required in order to complete 9-43.) (Do not round intermediate calculations. Round your answers to the nearest whole dollar.) Answer is complete but not entirely correct. s 85,405 Projected misstatement Estimated total audited value (2) s b. Use the difference estimation method to calculate: Answer is complete and correct. (1) (2) Projected misstatement Estimated total audited value 88,000 1.492.000 $ FIGURE 9.8 Risk Coefficients Incorrect Rejection Coefficient 2.58 2.00 1.96 1.64 Acceptable Level of Risk 1.0% 4.6 5.0 10.0 15.0 20.0 25.0 30.0 40.0 50.0 Incorrect Acceptance Coefficient 2.33 1.68 1.64 1.28 1.04 0.84 0.67 0.52 0.25 0.00 1.44 1.28 1.15 1.04 0.84 0.67 Rachel Robertson wishes to use mean-per-unit sampling to evaluate the reasonableness of the book value of the accounts receivable of Smith, Inc. Smith has 11,000 receivable accounts with a total book value of $1,580,000. Robertson estimates the population's standard deviation to be equal to $30. After examining the overall audit plan, the auditors believe that the account's tolerable misstatement is $54,000, and that a risk of incorrect rejection of 10 percent and a risk of incorrect acceptance of 20 percent are appropriate. Use Figure 98 Required: a. Calculate the required sample size. (Do not round any division. Round other computations and the final answer to the next whole number.) Assuming the following results Book value of items in sample-5148 Average audited value of items in sample=$140 Standard deviation of sample - $32 b. Use the mean perunt method to (Do not round any division. Round other computations and the final answers to the nearest whole value.) (1) Calculate the point estimate of the accounts audited value Et Required information (2) Calculate the projected misstatement for the population. Answer is complete but not entirely correct. Projected misstatement 7,000 (3) Calculate the adjusted allowance for sampling risk. Answer is complete but not entirely correct. Adjusted allowance for sampling risk s 17,393 Rachel Robertson wishes to use mean-per-unit sampling to evaluate the reasonableness of the book value of the accounts receivable of Smith, Inc. Smith has 11,000 receivable accounts with a total book value of $1,580,000. Robertson estimates the population's standard deviation to be equal to $30. After examining the overall audit plan, the auditors believe that the account's tolerable misstatement is $54,000, and that a risk of incorrect rejection of 10 percent and a risk of incorrect acceptance of 20 percent are appropriate. Use Figure 9.8 Assuming the following results: Book value of items in sample = $148 Average audited value of items in sample - $140 Standard deviation of sample - $32 Required: a. Use the ratio method to calculate: (The solution from 9-42 is required in order to complete 9-43.) (Do not round intermediate calculations. Round your answers to the nearest whole dollar) Answer is complete but not entirely correct. (1) (2) Projected misstatement Estimated total audited value LUCU VURUL HISH- Required information neYuuu a. Use the ratio method to calculate (The solution from 9-42 is required in order to complete 9-43.) (Do not round intermediate calculations. Round your answers to the nearest whole dollar.) Answer is complete but not entirely correct. s 85,405 Projected misstatement Estimated total audited value (2) s b. Use the difference estimation method to calculate: Answer is complete and correct. (1) (2) Projected misstatement Estimated total audited value 88,000 1.492.000 $ FIGURE 9.8 Risk Coefficients Incorrect Rejection Coefficient 2.58 2.00 1.96 1.64 Acceptable Level of Risk 1.0% 4.6 5.0 10.0 15.0 20.0 25.0 30.0 40.0 50.0 Incorrect Acceptance Coefficient 2.33 1.68 1.64 1.28 1.04 0.84 0.67 0.52 0.25 0.00 1.44 1.28 1.15 1.04 0.84 0.67
