Left and Right PAs Audited the Accounts Receivable of Investo

Left and Right PAs audited the accounts receivable of Investo Limited on a sample basis.There were 2,000 customer accounts in the subsidiary ledger with a total recorded value of
$375,000.As part of the audit program, Left and Right selected a sample of 100 accounts having a recorded value of $20,000.They performed the audit procedures and determined that the audited amount of the sample totalled $19,000.
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 Left and Right set the tolerable misstatement for accounts receivable at $25,000.

Correct Answer:

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A) (1) Average difference method:
PLM = ...

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