Edwards has decided to use monetary-unit sampling in the audit of an entity's accounts receivable balance. Few, if any, misstatements of account balance overstatement are expected.

Required:

1. Identify the advantages of using monetary-unit sampling over classical variables sampling.
3. Calculate the sample size and the sampling interval Edwards should use for the following information:
4. Tolerable misstatement
5. $15,000
6. Expected misstatement
7. $6,000
8. Desired confidence level
9. 95%
10. Recorded amount of accounts receivable
11. $300,000
12. Calculate the upper misstatement level assuming that the following three misstatements were discovered in testing based on the MUS sample computed in part (2).
13. Misstatement Number Book Value Audit Value

1 $ 600 $ 480

2 600 0

3 4,000 3,500