You are planning the confirmation of accounts receivable. There are 2,000 customers with a total book value of $5,643,200.Tolerable misstatement is set at $175,000 and expected misstatement is $40,000.The allowable risk of incorrect acceptance (TD risk) is 30%.

Required
a. What is the sampling interval?
b. What is the maximum sample size?
c. What is the largest value you can use for a random start?
d. Using the following list of the first 15 items in your population, a random start of $25,000, and a rounded sample interval of $100,000, identifies the items to be included in your sample.

e. What is the probability of selecting each of the following population items, assuming a $100,000 sampling interval?

f. Explain how item 1 in part (e) ($3,900) would be included in your sample prior to selecting a random start.
g. Why might the final sample size be less than the maximum samplesize?

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Item Book Value Cumulative Amount Sample Item Random Start 1 2 3 4 5 6 3,900 26,000 5.000 130,000 2,000 260,000 100 25,000 19,000 10,000 9.000 2,500 65,000 110,000 6,992 8 9 10 12 13 14 15 Item Book Value Probability of Selection 3,900 26,000 130,000 360,000 2 4