20.You are evaluating audit results for assets in the audit of Stevens Manufacturing. You set the...
20.You are evaluating audit results for assets in the audit of
Stevens Manufacturing. You set the preliminary judgment about
materiality at $70,000. The account balances, tolerable
misstatement, and estimated overstatements in the accounts are
shown next:
Account
Account balance
Tolerable Misstate
Est. of Total overstatement
Cash
$25,000
$2,500
$2,000
Account Rec.
$600,000
$15,000
$40,000
Inventory
$1,250,000
$25,000
?
Other assets
$125,000
$7,500
$24,000
Total
$2,000,000
$50,000
?
a. Assume you tested inventory amounts totaling $600,000 and found
$8,000 in overstatements. Ignoring sampling risk, what is your
estimate of the total misstatement in inventory?
b. Based on the audit of the assets accounts and ignoring other
accounts, are the overall financial statements acceptable?
c. What do you believe the auditor should do in the
circumstances?
Hi sir , please can you solve this quickly ?
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20.You are evaluating audit results for assets in the audit of
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