Q4. Sampling Terri Sampson is auditing the accounts receivable of Bikkely Ltd for the year...
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Q4. Sampling Terri Sampson is auditing the accounts receivable of Bikkely Ltd for the year ended 30th June 2020. Bikkely's accounts receivable balance was recorded at $8,500,000 and comprised more than 2,000 customer accounts. However Bikkely's 10 largest customer balances comprised a high percentage of the recoded accounts receivable (more than $1,500,000 or 30%). As a result, Terri is considering using Dollar Unit Sampling. Based on prior audits and other judgments, Terri has established the following parameters: Risk of Incorrect Acceptance 10% Tolerable Error $335,000 Expected Error $180,000 Required a. Determine the required sample size that would be used by Terri in the audit of Bikkely Ltd. Explain how you arrived at this sample size - marks will be based on your workings/logic/approach, as well as the sample size specified. b. Calculate the sampling interval - show all workings. c. In your own words explain the concept of tolerable error in dollar unit sampling - this must be written in your own words. [6+2 +2 = 10 Marks)
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