You are planning to use dollar unit sampling to evaluate the results of accounts- receivable confirmation for the Meridian Company. You have already tested internal controls for sales, sales returns and allowances, and cash receipts, and they are considered excellent. Owing to the quality of the controls, you decide to use a confidence level of 90%. There are 3,000 accounts receivable with a gross value of 556,800,000. An overstatement or understatement of more than \($150,000\) would be considered material.

Required :

a. Calculate the required sample size at a confidence level of 90%.

b. Calculate the required sample size if the confidence level was 70%. (Use the combined attributes-variables evaluation error adjustment factors table.)

c. Explain the methodology of obtaining sample items for confirmation. Your explanation should include how to select the random numbers and the receivable items to be confirmed.

d. Assume the sample size you selected for part a was 150 items. Twenty-five of the random numbers were for accounts that had already been selected by other random numbers. Calculate the error bounds, assuming no errors were found in the sample.

e. What conclusion can you reach about the population?