Watkins Fire is examining the accounts receivable (which were recorded at $500,000) for TBB, Inc. using a monetary unit sampling application. Using a risk of incorrect acceptance of 5% and a tolerable misstatement of $50,000, Watkins has determined a sample size of 100 items. Watkins found the following three misstatements.

Account Number Recorded Balance Audited Balance

128 $2,500 $1,250

415 $2,000 $1,500

526 $8,000 $7,000

a. What is the sampling interval?

b. Based on the above information, calculate the actual misstatement, projected misstatement, incremental allowance for sampling risk, and basic allowance for sampling risk.

c. What is the upper limit on misstatements?