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Cerrena [4.2K]
2 years ago
7

The accounting firm of johnson and johnson has decided to design a nonstatistical sample to examine the accounts receivable bala

nce of francisco fragrances, inc. , at october 31. as of october 31, there were 1,500 accounts receivable accounts with a balance of $5. 5 million. the accounts receivable population can be segregated into the following strata:
number and size

of accounts

book value

of stratum

10 accounts >

$ 50,000

$ 750,000

440 accounts >

$ 5,000

3,000,000

1,050 accounts <

$ 5,000

1,750,000

jonathan l. gren, senior-in-charge of the audit, has made the following decisions:_______.

1. based on the results of the tests of controls and risk assessment procedures, a low assessment is made for the risk of material misstatement. 2. the desired confidence level is moderate. 3. the tolerable misstatement allocated to accounts receivable is $155,000, and the expected misstatement is $55,000. 4. all the balances greater than $50,000 will be auditedrequired-using the nonstatistical sampling formula included in the textbook, compute the suggested sample size for this test using table 9-5. gren confirmed the accounts receivable accounts selected and noted the following results (round your answer to the nearest dollar amount. omit the "$" sign in your response. ):stratumbook value of stratumbook value of sampleaudit value of sampleamount of overstatement>$

50,000$ 750,000$ 750,000$ 746,500$ 3,500>$5,0003,000,000910,000894,75015,250>$5,0001,750,00070,00068,4501,550using ratio projection, what is the total projected misstatement? what conclusion should gren make concerning the accounts receivable balance?
Business
1 answer:
Vlad [161]2 years ago
8 0

The total projected misstatement of the firm is $92225 and it can be concluded that projected misstatement is more than the expected misstatement.

<h3>How to calculate the projected misstatement?</h3>

The total projected misstatement will be calculated thus:

= $3500 + ($15250/$910000 × 3000000) + (1550/70000 × 1750000

= $3500 + $50275 + $38750

= $92225

The projected misstatement is more than the expected misstatement. Therefore, there is an unacceptable risk that the true misstatement is more than the tolerable misstatement.

Learn more about firms on:

brainly.com/question/25491204

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