You are assigned to audit accounts payable for a manufacturing client. As part of the planning, your manager sets a tolerable misstatement amount of+/- $125,000. Your review of unpaid invoices indicates an understatement error of $25,253 from a sample of $675,467. The population value of A/P is $5,241,687 at October 31st. The remaining unadjusted difference (rounded) is:
A) $6,998.
B) $150,253.
C) $131,998.
D) $12,998.

Question

Quizplus · Accepted Answer

To calculate the remaining unadjusted difference, we need to use the projected misstatement formula: 
(Related sample amount / Total sample amount) x Population value - Recorded amount = Remaining amount
Plugging in the values, we get: 
(25,253 / 675,467) x 5,241,687 - 25,253 = 131,998.19
Rounding this to the nearest dollar, the remaining unadjusted difference is $131,998, which is option C.

You Are Assigned to Audit Accounts Payable for a Manufacturing