Question

1

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 $3,200,000 Duffney has determined that the account's tolerable misstatement is $450,000 His sample results are as follows: Average audited value Average book value $1,655 1,864 Required: Calculate the accounts receivable estimated audited value and projected misstatement using the (Do not round your intermediate calculations and round your final answer to nearest whole dollar.) Estimated Audited Value Projected Misstatement a. Mean-per-unit method b. Ratio method c. Difference method

Answer 1

-Answer page or Given details Average audited value = $1055 Average book value = 1064 Ley mean per unit method $1055 X 3000 accounts - $ 3165000 estimated audited value the projected misstatement is equal to the client's book value minus the estimated audited value. $ 3200000 - $ 3165000 = $ 35000 projected misstatement (b) Ratio method project ed misstatement using the ratio method is calculated as follows Sample net misstatement x population book value. Book value of Sample Sample net misstatement = 100x (10555-1064) -900 Book value of the sample = 100X$ 1064 = $ 106400

page-02 projected misstatement = -4 700 x $3.000 11 $106400 = $37067 overstatement The estimated audited value would be calculated as follows Estimated audited value = Book valueen projected overstatement =$3200000 - 497067 = 3172933 (C) Difference method projected mis statement : Sample net misstatement s Sample items : population items - $900 3000 100 - $ 27000 overy Statement Estimated misstatement - Book value-projected misstale ..ment $3200000 - $ 27000 - $ 3173000

page: 03. ai mean per unit method be Ratio method Co difference method Estimated l projected Audited value misstatement $ 3165000 35000 $3149933 $ 27064 $3173000 / $ 24000