James Duffney, CPA, has randomly selected and audited a sample of 100 of Will-Mart’s accounts receivable. Will-Mart has 6,140 accounts receivable accounts with a total book value of $6,000,000. Duffney has determined that the account’s tolerable misstatement is $500,000. His sample results are as follows:   Average audited value $962 Average book value 970   Required: Calculate the accounts receivable estimated audited value and projected misstatement using the: a. Mean-per-unit method. b. Ratio method. c. Difference method.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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James Duffney, CPA, has randomly selected and audited a sample of 100 of Will-Mart’s accounts receivable. Will-Mart has 6,140 accounts receivable accounts with a total book value of $6,000,000. Duffney has determined that the account’s tolerable misstatement is $500,000. His sample results are as follows:

 

Average audited value $962

Average book value 970

 

Required:

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

a. Mean-per-unit method.

b. Ratio method.

c. Difference method.

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