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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
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 client's records Include 10,000 accounts with a total book value of $1,250,000. You decide to use tolerable misstatement of $182,000, an incorrect acceptance risk of 5 percent, and an incorrect rejection risk of 4.6 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 $122. Assuming that the standard deviation of the sample's audited value is also $25, what is the projected misstatement for the population? c. Assuming that the standard deviation of the sample's audited value is $20, what is the projected misstatement for the population? Required A Required B Required C Assuming that the standard deviation of the sample's audited value is $20, what is the projected misstatement for the population? Projected miststatement Confidence Interval Materially misstated? Will you accept the account? < Required B Required C
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