You are the auditor of Unet Incorporated, an auto air-conditioner service and repair company, and you have decided to use the mean- per-unit method to test the existence and gross valuation of recorded accounts receivable. The client's records include 10,000 accounts with a total book value of $2,500,000. You decide to use tolerable misstatement of $182,000, an incorrect acceptance risk of 5 percent, and an incorrect rejection risk of 4.6 percent. Using Excel, you estimated the standard deviation of the population as $100. Required: a. Determine the sample size. b1. The mean audited value of the accounts in the sample was $244. Assuming that the standard deviation of the sample's audited value is also $100, what is the projected misstatement for the population? b2. Will you accept this account as not being materially misstated? c1. Assuming that the standard deviation of the sample's audited value is $125, what is the projected misstatement for the population? c2. Will you accept this account as not being materially misstated? > Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. Req A Req B1 Req B2 Req C1 Req C2 Determine the sample size. Sample size 142 accounts
You are the auditor of Unet Incorporated, an auto air-conditioner service and repair company, and you have decided to use the mean- per-unit method to test the existence and gross valuation of recorded accounts receivable. The client's records include 10,000 accounts with a total book value of $2,500,000. You decide to use tolerable misstatement of $182,000, an incorrect acceptance risk of 5 percent, and an incorrect rejection risk of 4.6 percent. Using Excel, you estimated the standard deviation of the population as $100. Required: a. Determine the sample size. b1. The mean audited value of the accounts in the sample was $244. Assuming that the standard deviation of the sample's audited value is also $100, what is the projected misstatement for the population? b2. Will you accept this account as not being materially misstated? c1. Assuming that the standard deviation of the sample's audited value is $125, what is the projected misstatement for the population? c2. Will you accept this account as not being materially misstated? > Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. Req A Req B1 Req B2 Req C1 Req C2 Determine the sample size. Sample size 142 accounts
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Transcribed Image Text:You are the auditor of Unet Incorporated, an auto air-conditioner service and repair company, and you have decided to use the mean-
per-unit method to test the existence and gross valuation of recorded accounts receivable. The client's records include 10,000
accounts with a total book value of $2,500,000. You decide to use tolerable misstatement of $182,000, an incorrect acceptance risk of
5 percent, and an incorrect rejection risk of 4.6 percent. Using Excel, you estimated the standard deviation of the population as $100.
Required:
a. Determine the sample size.
b1. The mean audited value of the accounts in the sample was $244. Assuming that the standard deviation of the sample's audited
value is also $100, what is the projected misstatement for the population?
b2. Will you accept this account as not being materially misstated?
c1. Assuming that the standard deviation of the sample's audited value is $125, what is the projected misstatement for the population?
c2. Will you accept this account as not being materially misstated?
> Answer is complete but not entirely correct.
Complete this question by entering your answers in the tabs below.
Req A
Req B1
Req B2
Req C1
Req C2
Determine the sample size.
Sample size
142 accounts
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