Problem

The accounts receivable population for Jake’s Bookbinding Company follows. This table is t...

The accounts receivable population for Jake’s Bookbinding Company follows. This table is the same as Table 1 on page 560, except that cumulative amounts are included to assist you in completing the problem. The population is smaller than is ordinarily the case for statistical sampling, but an entire population is useful to show how to select PPS samples.

a. Select a random PPS sample of 10 items, using computer software.
b. Select a sample of 10 items using systematic PPS sampling using the same concepts discussed in Chapter 15 for systematic sampling. Use a starting point of 1857. Identify the physical units associated with the sample dollars. (Hint: The interval is 207,295÷10.)
c. Which sample items will always be included in the systematic PPS sample regardless of the starting point? Will that also be true of random PPS sampling?
d. Which method is preferable in terms of ease of selection in this case?
e. Why will an auditor use MUS?

Population Item	Recorded Amount	Cumulative Amount	Population Item (cont.)	Recorded Amount (cont.)	Cumulative Amount (cont.)
1	$ 1,410	$ 1,410	21	$ 4,865	$117,385
2	9,130	10,540	22	770	118,155
3	660	11,200	23	2,305	120,460
4	3,355	14,555	24	2,665	123,125
5	5,725	20,280	25	1,000	124,125
6	8,210	28,490	26	6,225	130,350
7	580	29,070	27	3,675	134,025
8	44,110	73,180	28	6,250	140,275
9	825	74,005	29	1,890	142,165
10	1,155	75,160	30	27,705	169,870
11	2,270	77,430	31	935	170,805
12	50	77,480	32	5,595	176,400
13	5,785	83,265	33	930	177,330
14	940	84,205	34	4,045	181,375
15	1,820	86,025	35	9,480	190,855
16	3,380	89,405	36	360	191,215
17	530	89,935	37	1,145	192,360
18	955	90,890	38	6,400	198,760
19	4,490	95,380	39	100	198,860
20	17,140	112,520	40	8,435	207,295

Table 1 Illustrative Accounts Receivable Population

Population Item	Recorded Amount	Population Item (cont.)	Recorded Amount (cont.)
1	$ 1,410	21	$ 4,865
2	9,130	22	770
3	660	23	2,305
4	3,355	24	2,665
5	5,725	25	1,000
6	8,210	26	6,225
7	580	27	3,675
8	44,110	28	6,250
9	825	29	1,890
10	1,155	30	27,705
11	2,270	31	935
12	50	32	5,595
13	5,785	33	930
14	940	34	4,045
15	1,820	35	9,480
16	3,380	36	360
17	530	37	1,145
18	955	38	6,400
19	4,490	39	100
20	17,140	40	8,435
			$ 207,295