The auditors are using mean-per-unit sampling to evaluate the reasonableness of the book value of the accounts receivable of Smith, Inc. Smith has 10,000 receivable accounts with a total book value of $800,000. The auditors estimate the population's standard deviation as being equal to $25. After examining the overall audit plan, the auditors believe that the account's tolerable misstatement is $40,000, and that a risk of incorrect rejection of .10 (risk coefficient = 1.64) and a risk of incorrect acceptance of .15 (risk coefficient = 1.04) should be used. Assume that your sample size is 289 (the square root of 289 is 17) and that you obtained the following results: Average audited value of items in sample: $76 Average book value of items in sample: $78 Standard Deviation in the sample (audited values): $24 Standard Deviation in the sample (book values): $26 Required: a. Using mean-per-unit sampling, calculate the projected misstatement for the population. b. Using mean-per-unit sampling, calculate the allowance for sampling risk and confidence interval. c. Would you "accept" or "reject" the client's book value, $800,000, and why or why not? Preview