You are auditing Omicron Ltd and have decided to use dollar unit sampling (DUS) when performing a substantive test on the client?s receivables balance. The tolerable misstatement amount is $10,000.

Omicron Ltd has 500 receivables and the total receivables amount is $2,000,000.

Below are the initial 20 items from the population of receivables:

You have decided to select 100 receivables for testing. The random start value is 8365.

Required:

(a) Which receivables will be the first four included in the sample? Show all calculations.

(b) Which receivable will always be included in the sample regardless of the value of the random start? Explain.?

(c) If the total amount for the 100 samples is $500,000 and the misstatement found in the samples is $3,000, explain whether the receivables balance is materially misstated. Show all calculations.

Name of Receivable A B C D E F G H J K L M N P Q R ORSTD U V Balance ($) 1,890 6,250 825 32,110 6,225 1,000 770 5,725 9,130 7,755 425 11,895 3,270 1,150 975 910 2,465 4,220 735 1,760