Consider the data from the previous problem. For each of the sampling methods named:

a. Compute the total amount of the transactions sampled and the proportion of the cumulative total the sample represents.

b. Discuss the advantages and risks of each sampling method assuming that it would be applied to the entire accounts payable ledger.

c. Suggest and defend an optimal combination of methods for the audit sample in this case.

Problem 16.2

You have been assigned to audit the accounts payable of Slamtastic, a small recording company specializing in alternative music. Following is a portion of their accounts payable journal for the month of December:

Generate a sample of eight transactions under the following sampling methods using the random number table from Figure 16-2 when necessary:

Figure 16-2

Purchase Order Transaction Item Number Date Total Cumulative Total 11 1234567890-256 04142 12-08 $1,447.85 $125,777.55 04143 12-08 354.67 126,132.22 04144 12-08 64.28 126,196.50 04145 12-09 6,500.00 132,696.50 04146 12-09 12,428.99 145,125.49 04147 12-09 552.81 145,678.30 04148 12-09 8,988.46 154,666.76 04149 12-10 580.03 155,246.79 04150 12-10 6,431.82 161,678.61 04151 12-10 311.00 161,989.61 04152 12-13 9,597.82 171,587.43 04153 12-13 51.31 171,638.74 04154 12-13 4,720.90 176,359.64 14* 04155 12-13 2,847.63 179,207.27 04156 12-14 8,992.22 188,199.49 04157 12-14 59.34 188,258.83 17 04158 12-14 7,571.61 195,830.44 18 04159 12-14 98,523.00 294,353.44 19* 04160 12-15 689.79 295,043.23 20 04161 12-15 99.60 295,142.83 21 04162 12-15 4,465.01 299,607.84 22 04163 12-15 8,836.70 308,444.54 23 04164 12-15 722.30 309,166.84