The 4,000 accounts receivable of Miller Company have a total book value of $150,000.A CPA has selected and audited a sample of 100 accounts with a total book value of $3,700 and an audited value of $3,800.
-Using difference estimation,an auditor has taken a sample of 150 from a population's 50,000 items;that population has a book value of $250,000.She found that in her sample the average audited value was $4.50,while the average book value was $5.20.What is the estimated total audited value of the population?
A)$215,000.
B)$216,346.
C)$225,000.
D)$250,000.

Question

Quizplus · Accepted Answer

The estimated total audited value is calculated by adjusting the total book value by the average difference found in the sample. The average difference is $5.20 - $4.50 = $0.70. The total difference for the population is $0.70 * 50,000 = $35,000. Subtracting this from the total book value gives $250,000 - $35,000 = $215,000.

The 4,000 Accounts Receivable of Miller Company Have a Total