The following data for a substantive test using sampling are available:

Population recorded amount- \(\$ 200,000\)

Tolerable misstatement \(\$ 10,000\)

Number of items in the population-200 Risk of incorrect acceptance- 20 percent Estimated misstatement in the population-0 Required:

a. Assume the use of non statistical sampling and a sample size of 50. Assume that the recorded amount of the sample is \(\$ 40,000\) and the audited amount of the sample is \(\$ 35,000\). Calculate the projected misstatement using the two methods illustrated in the chapter. Using both methods, indicate why the sampling results are acceptable or unacceptable.

b. Assume the use of PPS sampling with zero anticipated misstatements.

(1) Calculate the sample size using the equations and tables illustrated in the chapter.

(2) Disregarding Problem (1), assume a sample size of 40 . What is the sampling interval? If a misstatement is found in an account with a recorded balance of \(\$ 50,000\). would "tainting" have to be used to calculate a projected misstatement? Why or why not? Calculate the projected misstatement if a \(\$ 400\) overstatement is found in an account with a recorded balance of \(\$ 4,000\).