# Question: You are the auditor of Jexel an auto air conditioner

You are the auditor of Jexel, an auto air conditioner service and repair company, and you have decided to use the mean-per-unit method to test the existence and gross valuation of recorded accounts receivable. The client’s records include 10,000 accounts with a total book value of $1,250,000. You decide to use tolerable misstatement of $182,000, an incorrect acceptance risk of 5 percent, and an incorrect rejection risk of 4.6 percent. Using generalized audit software, you estimated the standard deviation of the population as $25.

a. Determine the sample size.

b. Assume you tested the sample and got the following results: The mean audited value of the 25 accounts was $122. Assuming that the standard deviation of the sample’s audited value is also $25, will you accept the account as not being materially misstated? What is the projected misstatement for the population?

c. Assuming that the standard deviation of the sample’s audited value is $20, will you accept the account as not being materially misstated? Show your calculations. What is the projected misstatement for the population?

a. Determine the sample size.

b. Assume you tested the sample and got the following results: The mean audited value of the 25 accounts was $122. Assuming that the standard deviation of the sample’s audited value is also $25, will you accept the account as not being materially misstated? What is the projected misstatement for the population?

c. Assuming that the standard deviation of the sample’s audited value is $20, will you accept the account as not being materially misstated? Show your calculations. What is the projected misstatement for the population?

## Answer to relevant Questions

In the audit of Potomac Mills, the auditors wish to test the costs assigned to manufactured goods. During the year, the company has produced 2,000 production lots with a total recorded cost of $5.9 million. The auditors ...Assume that your firm, Daulton & Weed, CPAs, has been approached by a Tempest, a golf ball manufacturer to attest to the average drive distance that Tempest’s new GOFAR ball can be driven. Tempest has presented you the ...What would be the difference between an attributes sampling plan and a variables sampling plan in a test of inventory extensions?For each term in the first column below, identify its definition (or partial definition). Each definition may be used once or not at all.Term a. Allowance for sampling riskb. Deviation ratec. Discovery samplingd. Projected ...When using PPS sampling, do auditors select sample items based on individual dollars, audit individual dollars, or both?Post your question