You are the auditor of Jexel, an auto air-conditioner service and repair company, and you have decided to use the mean-per-unit method to test the existence and gross valuation of recorded accounts receivable. The clients records include 10,300 accounts with a total book value of $1,250,000. You decide to use tolerable misstatement of $162,000, an incorrect acceptance risk of 10 percent, and an incorrect rejection risk of 5.0 percent. Using Excel, you estimated the standard deviation of the population as $25. Use Figure 9-8 to obtain the incorrect acceptance and rejection coefficients.

Required:

a. Determine the sample size.

b. Assume you tested the sample and got the following results: The mean audited value of the accounts sampled was $117. Assuming that the standard deviation of the samples audited value is also $25, what is the projected misstatement for the population?

c. Assuming that the standard deviation of the samples audited value is $20, what is the projected misstatement for the population?

FIGURE 9.8 Risk Coefficients Determine the sample size. (Roundup to the next whole number.) Assume you tested the sample and got the following results: The mean audited value of the accounts sampled was $122. Assuming that the standard deviation of the sample's audited value is also $25, what is the projected misstatement for the population? What is the confidence interval? Is the account materially misstated? Assuming that the standard deviation of the sample's audited value is $20, what is the projected misstatement for the population? FIGURE 9.8 Risk Coefficients Determine the sample size. (Roundup to the next whole number.) Assume you tested the sample and got the following results: The mean audited value of the accounts sampled was $122. Assuming that the standard deviation of the sample's audited value is also $25, what is the projected misstatement for the population? What is the confidence interval? Is the account materially misstated? Assuming that the standard deviation of the sample's audited value is $20, what is the projected misstatement for the population