You have just completed the accounts receivable confirmation process in the audit of Danforth Paper Company, a paper supplier to retail shops and commercial users. Following are the data related to this process:
Accounts receivable recorded balance ....... $ 2,760,000
Number of accounts .............. 7,320
A nonstatistical sample was taken as follows:
All accounts over $10,000 (23 accounts) ...... $ 465,000
77 accounts under $10,000 ............ $ 81,500
Tolerable misstatement for the confirmation test .. $ 100,000
Inherent and control risk are both high
No relevant analytical procedures were performed
The following are the results of the confirmation procedures:

Required
a. Evaluate the results of the nonstatistical sample. Consider both the direct implications of the misstatements found and the effect of using a sample.
b. Assume that the sample was a PPS sample. Evaluate the results using monetary unitsampling.

Recorded Value Audited Value Items over $10,000 Items under $10,000 Individual misstatements for items under $10,000: S 465,000 81,500 S 432,000 77,150 tem 12 tem 19 tem 33 Item 35 Item 51 tem 59 Item 74 5,120 485 1,250 3,975 1,850 4,200 2,405 4,820 385 250 3,875 1,825 3,780 0