Principles Of Auditing & Other Assurance Services
21st Edition
ISBN: 9781259916984
Author: WHITTINGTON, Ray, Pany, Kurt
Publisher: Mcgraw-hill Education,
expand_more
expand_more
format_list_bulleted
Question
Chapter 9, Problem 46P
a.
To determine
Calculate the
b.
To determine
Calculate the accounts receivable estimated audited value and projected misstatement using ratio estimation method.
c.
To determine
Calculate the accounts receivable estimated audited value and projected misstatement using difference estimation method.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
The 1,000 accounts receivable of Gamco Company have a total book value of $20,000. Wilbur Schneitz, Certified Public Accountant (CPA), has selected and audited a sample of 50 accounts with a total book value of $900. Using nonstatistical variables sampling and the difference estimation technique, Smith has properly estimated a projected misstatement of an overstatement of $3,000 for the entire population. The total audited value of Schneitz’s sample is:
650
1000
750
900
The 4,000 accounts receivable of GHI Company have a total book value of $60,000. Bob Smith, Certified Public Accountant (CPA), has selected and audited a sample of 100 accounts with a total book value of $1,600. Using the mean-per-unit estimation technique, Smith has properly estimated a projected misstatement of a $8,000 overstatement for the entire population. The audited value of Smith's sample is:
Multiple Choice
$1,600
$1,800
$1,300
$1,400
The 1,500 accounts receivable of DEF Company have a total book value of $30,000. Bob Smith, Certified Public Accountant (CPA), has selected and audited a sample of 50 accounts with a total book value of $1,050. Using the difference estimation technique, Smith has properly estimated a projected misstatement of an overstatement of $3,000 for the entire population. The total audited value of Smith's sample is:
Multiple Choice
$900
$1,150
$850
$950
Chapter 9 Solutions
Principles Of Auditing & Other Assurance Services
Ch. 9 - Prob. 1RQCh. 9 - Prob. 2RQCh. 9 - Prob. 3RQCh. 9 - Prob. 4RQCh. 9 - Prob. 5RQCh. 9 - Prob. 6RQCh. 9 - Prob. 7RQCh. 9 - Prob. 8RQCh. 9 - Prob. 9RQCh. 9 - Prob. 10RQ
Ch. 9 - Prob. 11RQCh. 9 - Prob. 12RQCh. 9 - What is a dual-purpose test?Ch. 9 - Prob. 14RQCh. 9 - Prob. 15RQCh. 9 - Prob. 16RQCh. 9 - What would be the difference between an attributes...Ch. 9 - Prob. 18RQCh. 9 - Prob. 19RQCh. 9 - Prob. 20RQCh. 9 - Prob. 21RQCh. 9 - Prob. 22RQCh. 9 - Prob. 23RQCh. 9 - Prob. 24RQCh. 9 - Prob. 25RQCh. 9 - Prob. 26RQCh. 9 - Prob. 27RQCh. 9 - Prob. 28RQCh. 9 - Prob. 29QRACh. 9 - Prob. 30QRACh. 9 - Prob. 31QRACh. 9 - Prob. 32QRACh. 9 - Prob. 33QRACh. 9 - Prob. 34QRACh. 9 - Prob. 35QRACh. 9 - Prob. 36QRACh. 9 - Prob. 37AOQCh. 9 - Prob. 37BOQCh. 9 - Prob. 37COQCh. 9 - Prob. 37DOQCh. 9 - Prob. 37EOQCh. 9 - Prob. 37FOQCh. 9 - Prob. 37GOQCh. 9 - Prob. 37HOQCh. 9 - Prob. 37IOQCh. 9 - Prob. 37JOQCh. 9 - Prob. 37KOQCh. 9 - Prob. 37LOQCh. 9 - Prob. 38OQCh. 9 - Prob. 39OQCh. 9 - For each term in the first column below, identify...Ch. 9 - Prob. 41OQCh. 9 - Smith, Inc. Rachel Robertson wishes to use...Ch. 9 - Prob. 43OQCh. 9 - Prob. 44PCh. 9 - Prob. 45PCh. 9 - Prob. 46PCh. 9 - Prob. 47PCh. 9 - In the audit of Potomac Mills, the auditors wish...Ch. 9 - Prob. 49PCh. 9 - Prob. 50PCh. 9 - Prob. 51PCh. 9 - Prob. 52ITC
Knowledge Booster
Similar questions
- In the audit of Checkers, Inc., a nonissuer, the auditor was assigned to a test of cash disbursements. The auditor randomly selected a sample of 75 items out of the 1,500 disbursements made. After completing the test procedures, the auditor determined that the sample contained several misstatements totaling $4,500. All of these were overstatements. The auditor then computed a projected misstatement of $90,000 $24,500 $337,500 $112,500 0000arrow_forwardThe Bizayeva CPA firm is auditing Hagopian, Inc. The company is a manufacturer. It manufactures laptops and ships them to stores. The company had a good year, with (unaudited) $2,500,000 in accounts receivable at year-end. Bizayeva decides to test management’s assertion of the existence of this amount of accounts receivable by using Monetary Unit Sampling. Bizayeva decides, based on last year’s audit, on a 90% confidence level. Bizayeva expects the accounts receivable are misstated by $25,000. Bizayeva decides that a misstatement of as much as $100,000 is tolerable, for accounts receivable to be regarded as materially correct. What is the required sample size?arrow_forwardss.arrow_forward
- 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…arrow_forwardAssume that you are preparing to confirm accounts receivable at December 31, 2025, which is one month prior to the fiscal year - end of January 31, 2026. The book value of gross accounts receivable is $71,622, 804. Complete the following requirements related to the confirmation of receivables for Cloud 9 based on previous work and the following information Required:a. Using PPS sampling, determine the sample size that you want to use for sending accounts receivable confirmations. You make the following assumptions.You set tolerable misstatement for accounts receivable at $3,500,000. Expected misstatement = $750,000. Risk of incorrect acceptance = 37%. Given these parameters: 1. What do you calculate for sample size? 2. What do you calculate for the sampling interval?arrow_forwardThe auditor of Tent manufacturing Ltd has decided to use systematic selection of cash payments when testing the control that cheque payments are supported by a supplier’s invoice, a purchase requisition and a goods received note. Each cheque comprises a sampling unit. There are 4000 cheques drawn (numbered 1–4000) and the total amount of cash payments is $12 million. The sample size is 25 and the random start is 205. Given this information, the second item selected will be item no:Select one:a. Cheque number 2415.b. Cheque number 160.c. Cheque number 365.d. Some other item number.arrow_forward
- Please help mearrow_forwardYou are auditing the accounts receivable for Conor Company as of December 31, 2021. One of your procedures was to send positive confirmations to a sample of 50 accounts. Of those 50 confirmations, 40 have been positively confirmed without comments, 7 had minor differences that have been cleared satisfactorily. Two of the responses had the following comments: a. “We never received these goods.” b. “The balance of $1,000 was paid on December 15, 2021.” For each of these comments, identify the steps that you would take to clear (resolve) them.arrow_forwardHardevarrow_forward
- You are auditing the accounts receivable for Conor Company as of December 31, 2022 One of your procedures was to send positive confirmations to a sample of 50 accounts. Of those 50 confirmations, 40 have been positively confirmed without comments, 7 had minor differences that have been cleared satisfactorily. The remaining 3 had the following comments: “We received $6,000 of goods on consignment on November 20, 2022. We have not sold them yet.” “We received these goods on January 5, 2023 and mailed a check on January 7, 2023.” “The balance of $2,000 was paid on December 10, 2022.” For each of these comments, identify the steps that you would take to clear (resolve) them.arrow_forwardChase bank mailed out a survey to all 3,456 savings account customers. A total of 568 surveys were returned. Values computed from the returned surveys would constitute parameters since all 568 customers were surveyed. True Falsearrow_forwardNonearrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Auditing: A Risk Based-Approach to Conducting a Q...AccountingISBN:9781305080577Author:Karla M Johnstone, Audrey A. Gramling, Larry E. RittenbergPublisher:South-Western College Pub
Auditing: A Risk Based-Approach (MindTap Course L...AccountingISBN:9781337619455Author:Karla M Johnstone, Audrey A. Gramling, Larry E. RittenbergPublisher:Cengage Learning
Auditing: A Risk Based-Approach to Conducting a Q...
Accounting
ISBN:9781305080577
Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg
Publisher:South-Western College Pub
Auditing: A Risk Based-Approach (MindTap Course L...
Accounting
ISBN:9781337619455
Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg
Publisher:Cengage Learning