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

You are planning to use monetary unit sampling to evaluate accounts receivable for Violet Company. The accounts receivable account totals $3,000,000. You have assessed a risk of incorrect acceptance of 5 percent, a tolerable misstatement of $120,000, and an expected misstatement of $24,000.

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 Recorded Value Audit Value Difference
102 $2,000 $600 $1,400
235 $3,200 $1,920 $1,280

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