You are the auditor of Unet Incorporated, 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 16,500 accounts with a total book value of $4,112,000. 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 $126.

Required:

a. Determine the sample size.

b1. The mean audited value of the accounts in the sample was $244. Assuming that the standard deviation of the samples audited value is also $126, what is the projected misstatement for the population?

b2. Will you accept this account as not being materially misstated?

c1. Assuming that the standard deviation of the samples audited value is $244, what is the projected misstatement for the population?

c2. Will you accept this account as not being materially misstated?