Question

Problem 9-46 [LO 9-7, 9-8] Scott Duffney, CPA, has randomly selected and audited a sample of 100 of Will-Mart’s accounts receivable. Will-Mart has 3,000 accounts receivable accounts with a total book value of $3,950,000. Duffney has determined that the account’s tolerable misstatement is $1,200,000.

His sample results are as follows:

Average audited value $ 1,310

Average book value 1,318

Required:

Calculate the accounts receivable estimated audited value and projected misstatement using the:

		Estimated Audited Value	Projected Misstatement
a	Mean-Per-Unit Method
b	Ratio Method
c	Difference method

Answer 1

Solutiong Given data, audited a sample of coo of wil --Mart's accomert receivable will-mast has 3000 accounts receivable Total book value $ 3950 ooo account tolerable misstatement $1200000 Average audited value . $13.00 Average book value 1,318 ca). Mean per unit methodo Estimated audited value = 1310 x 3000 LE $3930000 projected misstate meet = book welier Estimated B audited value 3950000 - 3930 OVO 5 SO . : $20000 (overstatement

(b) Ratio method i The projected müsstatement can also be calculated ratio method. e by using ratio method. 1 sample net misstatement & population book value Book value of sample Sample netima statement = 100 (1310-1318) .. = 10068) $800 Book value of sample = 100 x 1318 Lt = $ 131800 projected misstatement. 800 : $731800 * 3450000 23976 lover statements Estimated audit value = book value - projected ovensten -ent = 3950000 -23976 2$ 3926024

Difference. me thodi (C WA ference estimations The projected misstatement by projected misstatement - Sample net misstatement - хрорukhву ? Szuple items = $RCO X 2000 2000 4000 overstatement Estimated audit Value = Book Reluea poojected müsstatement 3950OUD - 2.4000 - $3926000