The 2000 accounts receivable of ABC Company have a total bo.pdf

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ABC Company has $40,000 in accounts receivable across 2,000 accounts. A CPA sampled 100 accounts totaling $1,950 and found their audited value to be $1,875. Using a ratio estimation technique on the sample, the CPA estimated the total accounts receivable balance to be $38,462.

Formation

The 2,000 accounts receivable of ABC Company have a total book value of $40,000. Bob Rotter,
Certified Public Accountant (CPA), has selected and audited a sample of 100 accounts with a total
book value of $1,950. The audited value of the 100 accounts in the sample is $1,875.
Using the ratio estimation technique, Rotter's estimate (to the nearest dollar) of year-end accounts
receivable balance would be:
$37,500
$41,600
$38,462
$38,500

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