Williams,CPA Intends to Use Probability-Proportional-To-Size Sampling $$\begin{array} { c c } \text { Book Value } & \text { Audited Value } \\\$ 50 & \$ 49 \\400 & 300 \\8,000 & 6,000\end{array}$$

question 2

Essay

Williams,CPA intends to use probability-proportional-to-size sampling.He has properly selected and audited a sample of 100 accounts receivable from his client's population of 3000 accounts.He calculated a sampling interval of $5,000 and the tolerable misstatement for the account is $40,000.He has the following table available: Williams also recalls that "basic precision" is equal to the appropriate reliability factor multiplied times the sampling interval.He wishes to accept a risk of incorrect acceptance of 10 percent.
He found that 97 of the 100 accounts in the sample were properly calculated.However,the following three errors existed: $$\begin{array} { c c } \text { Book Value } & \text { Audited Value } \\\$ 50 & \$ 49 \\400 & 300 \\8,000 & 6,000\end{array}$$ a.Calculate the projected misstatement.
b.Calculate the basic precision.
c.Calculate the incremental allowance.
d.Calculate the upper limit on misstatement.
e.Explain how the auditors would consider the results calculated above.

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Definitions:

Endothelium

Layer of flat cells lining blood and lymphatic vessels and the chambers of the heart.

Precapillary Sphincters

Circular muscular valves located at the entrance of capillaries, regulating blood flow into the capillary beds according to the body's needs.

Tunica Media

Middle, usually muscular, coat of an artery or another tubular structure.

Capillary Beds

Networks of capillaries, the smallest blood vessels, that facilitate the exchange of water, oxygen, carbon dioxide, and many other nutrients and waste substances between blood and tissues.