9A-14. Edwards has decided to use monetary unit sampling (MUS) in the audit of a clients accounts receivable balance. Few, if any, misstatements of the account balance are expected.

Edwards plans to use the following MUS table:

Number of Overstatement Misstatements	Risk of Incorrect Acceptance
	1%	5%	10%	15%	20%
0	4.61	3.00	2.31	1.90	1.61
1	6.64	4.75	3.89	3.38	3.00
2	8.41	6.30	5.33	4.72	4.28
3	10.05	7.76	6.69	6.02	5.52
4	11.61	9.16	8.00	7.27	6.73

Required:

a. Identify the advantages of using MUS over classical variables sampling.

b. Calculate the sampling interval and the sample size Edwards should use given the following information:

Tolerable misstatement	$ 15,000
Risk of incorrect acceptance	5%
Estimated misstatement	$ 0
Recorded amount of accounts receivable	$300,000

Note: Requirements (c) through (f) are not related to requirements (a) and (b).

c. Assuming a sampling interval of $5,000, calculate the total projected misstatement if the following three errors were discovered in MUS:

Misstatement	Book Value	Audited Value
1	$ 400	$ 320
2	500	0
5	6,000	2,500

d. Calculate basic precision and incremental allowance.

e. Calculate the upper limit on misstatements.

f. Will you accept or reject the account as materially correct? Explain.