Huey and Duey,PAs audited the accounts receivable of Grando Limited on a sample basis.There were 2,000 customer accounts in the subsidiary ledger with a total recorded value of $450,000.As part of the audit program,Huey and Duey selected a sample of 100 accounts having a recorded value of $25,000.They performed the audit procedures and determined that the audited amount of the sample totaled $24,000.
Required:
A)Calculate the projected likely misstatement (PLM)using (1)the average difference method and (2)the ratio method.
B)Evaluate the results of the calculation in part (A).Assume that Huey and Duey set the tolerable misstatement for accounts receivable at $28,000.

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The Answer of Huey and Duey,PAs audited the accounts receivable of Grando Limited on a sample basis.There were 2,000 customer accounts in the subsidiary ledger with a total recorded value of $450,000.As part of the audit program,Huey and Duey selected a sample of 100 accounts having a recorded value of $25,000.They performed the audit procedures and determined that the audited amount of the sample totaled $24,000.
Required:
A)Calculate the projected likely misstatement (PLM)using (1)the average difference method and (2)the ratio method.
B)Evaluate the results of the calculation in part (A).Assume that Huey and Duey set the tolerable misstatement for accounts receivable at $28,000.

Huey and Duey,PAs Audited the Accounts Receivable of Grando Limited