Carson Allister is performing an MUS application in the audit of Bird Companys accounts receivable. Based on

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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Item Audited Balance Recorded Balance $35,000 10,000 6,000 $28,000 8,000 3,000