Accounting hw

2

>Instructions

Save this spreadsheet using the naming convention “yourfirst&lastname.xlsx”

You will use the spreadsheet labled “Calculation” to complete the problem.

All calculations must be done using the spreadsheet

You will need the tables in chapter 8 of the text.

Daily and Johnson, CPAs were conducting the audit of Garner Tool Supply for the year ended December

3 1

. Cindy Steward, senior-in-charge of the audit, plans to use MUS to audit Garner’s inventory account. The balance in the inventory account at December 31 was $

8,

0

00,000

.

Requirements:
a) Based on the information in the spreadsheet, calculate the required MUS sample size
b) Steve Brents, staff accountant, used the sample items selected in part (a) and performed the audit procedures listed in the inventory audit program. He noted the misstatements show in the spreadsheet in part (b). Using the information, calculate the upper misstatement limit.
c) Based on the results in part (b) What is the conclusion that Steve Brents should make concerning the inventory account balance?
NOTE THAT ALL CALCULATIONS SHOULD BE ACCOMPLISHED USING THE SPREADSHEET! I WILL CHECK THE FORMULAS AND THEY WILL ACCOUNT FOR 50% OF THE POINTS.

Solution

8,000,000

1

00

2

3

0

4

Auditing Chapter 9	Statistical Problem
Requirement (a)
Account Balalnce
Tolerable Misstatement	320,000
Expected Misstatement	120,000
Risk of Incorrect Acceptance	5%
Sample Size
Sampling Interval
Requirement (b)
Error Number	Book Value	Audit Value
12,000	2	4
9,000	6000
60,000
1200	640
Requirement (c)
Conclusion:

Sheet3