The accounting firm of johnson and johnson has decided to

Assignment Help Accounting Basics

Reference no: EM13599106

The accounting firm of Johnson and Johnson has decided to design a nonstatistical sample to examine the accounts receivable balance of Francisco Fragrances, Inc., at 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.
Based on the results of the test of controls and risk assessment procedures, a low assessment is made for the risk of material misstatement.
The desired confidence level is moderate.
The tolerable misstatement allocated to accounts receivable is $ 155,000, and the expected misstatement is $55,000
All the balances greater than $50,000 will be audited.

Required:

a. Using the nonstatistical sampling formula included in the textbook, compute the suggested sample size for this test.

b. Gren confirmed the accounts receivable accounts selected and noted the following results

Statum Book Value Book Value Audit Value Amount of Straum of Sample of Sample Overstatement

>50,000 750,000 750,000 746,500 3,500

>5,000 3,000,000 910,000 894,750 15,250

<5,000 1,750,000 70,000 68,450 1,550

Reference no: EM13599106

Questions Cloud

Namiki cpa is auditing the financial statements of taylor : namiki cpa is auditing the financial statements of taylor corporation for the year ended december 31 2009. namiki plans

What are the acceptable inventory valuation methods under : 1. what are the acceptable inventory valuation methods under the u.s. generally accepted accounting principles gaap?2.

Coltrane cpa is auditing jang wholesaling companys : coltrane cpa is auditing jang wholesaling companys financial statements and is about to perform substantive audit

Contract was for 160000 the engineers did extra work that : contract was for 160000 the engineers did extra work that put the company 16000 over budget they are billed through

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

You have decided that it might be a good idea to create a : you have decided that it might be a good idea to create a personal household budget for yourself. you know you are able

Considering the constraint calculate how much money is made : glunn company makes three products in a single facility. these products have the following unit revenue and cost data

Rothery co manufactures and sells medals for winners of : rothery co. manufactures and sells medals for winners of athletic and other events. its manufacturing plant has the

On june 32010 the firm of mcadams cooper and zhang decided : on june 32010 the firm of mcadams cooper and zhang decided to liquidate their partnership. the partners have capital

User Account

All Pages