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Question - The client has $500,000 in total recorded receivables, composed of 850 accounts. The auditor determines the following:
Tolerable misstatement $25,000
Risk of incorrect acceptance 5%
Expected misstatement $2,000
Determine the Sample Size and Sampling Interval
Using the formula provided above for Sample Size, the sample size is determined to be 69.
The formula to determine the Sampling Interval is Book Value divided by Sample Size. With this formula, our sample size is determined to be $7,246.
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