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c. Calculate ered in tes с. Miss

c. Calculate ered in tes с. Miss

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Answer all parts. Part C is part of the 9-21 question

Part 4 Statistical and Nonstatistical Sampling Tools for Auditing c. Calculate the UML assuming that the following three misstatements were discov- ered in testing based on the MUS sample computed in part (b). Book Value Audit Value Misstatement Number 1 $400 $320 500 3,000 2,500 (AICPA, adapted) 9-22 The firm of Le and Lysius was conducting the audit of Coomes Molding Corpora- tion for the fiscal year ended October 31. Michelle Le, the partner in charge of the audit, decides that MUS is the appropriate sampling technique to use in order to audit Coomes' inventory account. The balance in the inventory at October 31 was $4,250,000. Michelle has established the following: risk of incorrect acceptance %3D 5% (i.e., the desired confidence level of 95%) tolonohl $212 500. ent
Transcribed Image Text:Part 4 Statistical and Nonstatistical Sampling Tools for Auditing c. Calculate the UML assuming that the following three misstatements were discov- ered in testing based on the MUS sample computed in part (b). Book Value Audit Value Misstatement Number 1 $400 $320 500 3,000 2,500 (AICPA, adapted) 9-22 The firm of Le and Lysius was conducting the audit of Coomes Molding Corpora- tion for the fiscal year ended October 31. Michelle Le, the partner in charge of the audit, decides that MUS is the appropriate sampling technique to use in order to audit Coomes' inventory account. The balance in the inventory at October 31 was $4,250,000. Michelle has established the following: risk of incorrect acceptance %3D 5% (i.e., the desired confidence level of 95%) tolonohl $212 500. ent
le problems are available with Connect. MS le problems are available with Connect. Mc Graw Hill Education a connect Edwards has decided to use monetary-unit sampling in the audit of an entity's accounts receivable balance. Few, if any, misstatements of account balance over- statement are expected. ,9-2, 9-5 9-21 Required: a. Identify the advantages of using monetary-unit sampling over classical variables sampling. b. Calculate the sample size and the sampling interval Edwards should use for the following information: Tolerable misstatement $ 15,000 $ 6,000 95% Expected misstatement Desired confidence level Recorded amount of accounts receivable $300,000
Transcribed Image Text:le problems are available with Connect. MS le problems are available with Connect. Mc Graw Hill Education a connect Edwards has decided to use monetary-unit sampling in the audit of an entity's accounts receivable balance. Few, if any, misstatements of account balance over- statement are expected. ,9-2, 9-5 9-21 Required: a. Identify the advantages of using monetary-unit sampling over classical variables sampling. b. Calculate the sample size and the sampling interval Edwards should use for the following information: Tolerable misstatement $ 15,000 $ 6,000 95% Expected misstatement Desired confidence level Recorded amount of accounts receivable $300,000
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