NONSTATISTICAL SAMPLING Now, let's use non-statistical sampling to test the existence and valuation assertions related to...

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NONSTATISTICAL SAMPLING Now, let's use non-statistical sampling to test the existence and valuation assertions related to inventory. We will use a stratified sample. Assume that all parts with extended dollar values of greater than $50,000 will be tested. Tolerable Misstatement $155,000 Expected Misstatement $55,000 Desired Confidence Level Moderate Risk of Material Misstatement Low Total gross balance in inventory Number and dollar value of part numbers 10 parts > $50,000 440 parts $5,000 but < $50,000 1,050 parts < $5,000 $5,500,000 Book value of stratum $750,000 3,000,000 1,750,000 1. What should our sample size be given the above information? (Hint:you do not need to include the items you are testing 100% from in this answer, only items you are sampling) 2. Using ratio projection, calculate the total projected misstatement based upon the following information: Stratum Book Value of Sample Audit Value of Sample >$50,000 750,000 746,500 >$5,000 910,000 894,750 <$5,000 70,000 68,450 NONSTATISTICAL SAMPLING Now, let's use non-statistical sampling to test the existence and valuation assertions related to inventory. We will use a stratified sample. Assume that all parts with extended dollar values of greater than $50,000 will be tested. Tolerable Misstatement $155,000 Expected Misstatement $55,000 Desired Confidence Level Moderate Risk of Material Misstatement Low Total gross balance in inventory Number and dollar value of part numbers 10 parts > $50,000 440 parts $5,000 but < $50,000 1,050 parts < $5,000 $5,500,000 Book value of stratum $750,000 3,000,000 1,750,000 1. What should our sample size be given the above information? (Hint:you do not need to include the items you are testing 100% from in this answer, only items you are sampling) 2. Using ratio projection, calculate the total projected misstatement based upon the following information: Stratum Book Value of Sample Audit Value of Sample >$50,000 750,000 746,500 >$5,000 910,000 894,750 <$5,000 70,000 68,450

Answer rating: 100% (QA)

1 Given that we are testing 100 of items with a book value of 50000 or more we only need to calculat... View the full answer