Question

The auditors have sampled 40 accounts from a population of 250 accounts receivable. The sample items have a mean book value of $231 and a mean audited value of $240. The book value in the population is $227,000. What is the estimated total audited value of the population using the difference method?

Answer 1

$229,250

Step-by-step explanation:

Data provided in the question;

Sample size = 40

Number of accounts receivable = 250

Mean book value = $231

Mean audited value = $240

The book value in the population = $227,000

Now,

The Projected misstatement

= (Difference in value) × Number of accounts receivable

= ( $240 - $231 ) × 250

= $2,250

Therefore,

The estimated total audited value of the population

= The book value in the population + The Projected misstatement

= $227,000 + $2,250

= $229,250