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 ratio 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 of the population is calculated using the ratio of the audited value to the book value in the sample, then applying that ratio to the total book value of the population. The sample's audited value to book value ratio is $4.50 / $5.20. Applying this ratio to the total book value of the population ($250,000) gives an estimated audited value of $250,000 * ($4.50 / $5.20) = $216,346.

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