Carson Allister is performing a PPS application in the audit of Bird Company’s accounts receivable. Based on the acceptable level of the risk of incorrect acceptance of 5 percent and a tolerable misstatement of $120,000, Allister has calculated a sample size of 75 items and a sampling interval of $25,000. After examining the sample items, the following misstatements were identified: (Use Exhibit F.A.2.) Item Recorded Balance Audited Value 1 $35,000 $28,000 2 10,000 8,000 3 6,000 3,000 Required: Calculate the upper limit on misstatements for Bird Company’s accounts receivable.
Carson Allister is performing a PPS application in the audit of Bird Company’s accounts receivable. Based on the acceptable level of the risk of incorrect acceptance of 5 percent and a tolerable misstatement of $120,000, Allister has calculated a sample size of 75 items and a sampling interval of $25,000. After examining the sample items, the following misstatements were identified: (Use Exhibit F.A.2.) Item Recorded Balance Audited Value 1 $35,000 $28,000 2 10,000 8,000 3 6,000 3,000 Required: Calculate the upper limit on misstatements for Bird Company’s accounts receivable.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Carson Allister is performing a PPS application in the audit of Bird Company’s
(Use Exhibit F.A.2.)
| Item | Recorded Balance | Audited Value |
|---|---|---|
| 1 | $35,000 | $28,000 |
| 2 | 10,000 | 8,000 |
| 3 | 6,000 | 3,000 |
Required:
-
Calculate the upper limit on misstatements for Bird Company’s accounts receivable.
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