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You are planning to use monetary unit sampling to evaluate accounts receivable for Purple Company....

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Accounting

You are planning to use monetary unit sampling to evaluate accounts receivable for Purple Company. The accounts receivable account totals $4,000,000. You have assessed a risk of incorrect acceptance of 5 percent, a tolerable misstatement of $140,000, and an expected misstatement of $25,200.

a. Calculate the sample size and sampling interval.

b. Regardless of your answer to (a), use a sample size of 125 and the related sampling interval and calculate the upper limit on misstatements assuming you found the following differences.

Account 115 196

Recorded Balance $ 3,200 4,850

Audited Value $ 1,200 1,590

Difference $ 2,000 3,260

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