When Marge Simpson, PA, audited the Candle Company inventory, a random sample of inventory types was chosen for physical observation and price testing. The sample size was 80 different types of candles and candle-making inventory. The entire inventory contained 1740 types, and the amount in the inventory control account was $166,000. Simpson had already decided that a misstatement of as much as $6000 in the account would not be material. The audit work revealed the following eight errors in the sample of 80.

The negative difference indicates overstatement of the recorded amount.

Required:
Calculate the projected likely misstatement using the difference method. Discuss the decision choice of accepting or rejecting the $166,000 book value (recorded amount) withoutadjustment.

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BOOK VALUE AUDIT VALUE ERROR AMOUNT $600.00 15.50 65.25 83.44 16.78 78.33 13.33 93.87 $966.50 $622.00 14.50 31.50 53.45 15.63 12.50 14.22 39.87 $803.67 $(22.00) (33.75) 29.99) (65.83) $(.89) (54.00) S(162.83)