Question

Carson Allister is performing an MUS 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:


Required:
a. Calculate the upper limit on misstatements for Bird Company’s accounts receivable.
b. Provide a brief description of the meaning of the upper limit on misstatements calculated in (a).
c. What would Allister’s conclusion be with respect to the fairness of Bird’s accounts receivablebalance?


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  • CreatedOctober 27, 2014
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