$2,000

The requirement is to determine the projected error of misstatement of a PPS sample with a sampling interval of $5,000, when the auditor has discovered a recorded amount ($10,000) in excess of the sampling interval ($5,000). When an account recorded amount exceeds the sampling error, the projected error equals the actual misstatement, in this case, $2,000 ($10,000 - $8,000). $2,000

The answer $2,000 is correct since, when the sampling interval ($10,000) exceeds the account's recorded amount ($5,000), the projected error is determined , first by dividing the amount of misstatement by the recorded amount [($5,000-$4,000) /$5,000 = 0.2] The result times the sampling interval is the projected error. [0.2 x$10000 = $2,000]. ;