Independent of your responses to prior questions, assume that you direct tested customer balances greater than tolerable misstatement and randomly selected a sample of 40 additional customer balances for confirmation. The total book value of the 40 items sampled is $761,030. No differences were noted in the directed testing, and the sample yielded a combined overstatement in Hooplah's records of $4,215. Brian Thompson, the accounts receivable supervisor agrees that the differences noted are misstatements due to pricing errors. Please answer the following questions:
(a) How much is the known misstatement in the accounts receivable balance?
(b) How much is the projected misstatement in the population (i.e., the total accounts receivable account) using ratio projection?
(c) How much is the projected misstatement in the population using difference projection?
(d) Explain why the two projections produce different results and describe the circumstances under which one projection approach might be more appropriate than the other
(e) Based on the results of the detail testing outlined in this requirement, as well as the assurance obtained from controls testing and substantive analytical procedures, do the audit procedures support the assertion that the accounts receivable account is fairly stated? Why or why not?