question 1: Determine Materiality (use either a % difference or a dollar difference) and explain your reasoning

2:Write paragraph explaining which accounts you believe we need to do further work on because errors or misstatement could have occurred.

Exhibit 4.56.1 Dunder-Mifin, Inc. Unaudited Financial Information Prior Year Current Year Difference % Difference Forecast Current Yea] Difference % Difference (Audited) (Unaudited) (Unaudited) REVENUE AND EXPENSE: Sales (net) 9,000,000 9,720,000 (720,000) 8.00% 9,900,000 9,720,000 180,000 1.85% Cost of goods sold 6,296,000 7 ,000,000 (704,000) -11.18% 6,926,000 7,000,000 (74,000) - 1.06% Gross margin 2,704,000 2,720,000 (16,000) 0.59% 2,974,000 2,720,000 254,000 9.34% General expense 2,044,000 2,003,000 41,000 2.01% 2,000,000 2,003,000 (3,000) -0. 15% Depreciation 300,000 334,000 (34,000) -11.33% 334,000 334,000 - 0.00% Operating income 360,000 383,000 (23,000) -6.39% 640,000 383,000 257,000 67.10% Interest expense 60,000 75,000 (15,000) -25.00% 110,000 75,000 35,000 46.67% Income taxes (40%) 120,000 123,200 (3,200) -2.67% 212,000 123,200 88,800 72.08% Net income 180 000 184 800 4 800 -2.67% 318 000 184 800 133 200 72.08% ASSETS: Cash 600,000 690,800 (90,800) -15. 13% 880,000 690,800 189,200 27.39% Accounts receivable 500,000 900,000 (400,000) -80.00% 600,000 900,000 (300,000) -33.33% Allowance doubtful accounts (40,000) (90,000) 50,000 - 125.00% (48,000) (90,000) 42,000 -46.67% Inventory 1,500,000 1,3 50,000 150,000 10.00% 1,500,000 1,350,000 150,000 1 1.11% Total current assets 2,560,000 2,850,800 (290,800) -11.36% 2,932,000 2,850,800 81,200 2.85% Fixed assets 3,000,000 4,500,000 (1,500,000) -50.{N}% 4,700,000 4,500,000 200,000 4.44% Accum. depreciation (1,500,000) (1,834,000) 334,000 -22.27% (1,834,000) (1,834,000) - 0.00% Totalassets 4060000 5 516 800 1456 800 -35.88% 5798000 5 516800 281 00 5.10% LIABILITIES AND EQUITY: Accounts payable 450,000 330,000 120,000 26.67% 450,000 330,000 120,000 36.36% Bank loans, 8% - 1,750,000 (1,750,000) r #DIVN}! 1,750,000 1,750,000 - 0.00% Accrued interest 60,000 40,000 20,000 33.33% 40,000 40,000 - 0.00% Accruals and other 50,000 32,000 18,000 36.00% 60,000 32,000 28,000 87.50% Total current liabilities 560,000 2,152,000 (1,592,000) -284.29% 2,300,000 2,152,000 148,000 6.88% Long-term debt, 10% 600,000 400,000 200,000 33.33% 400,000 400,000 - 0.00% Total liabilities 1,160,000 2,552,000 (1,392,000) - 120.00% 2,700,000 2,552,000 148,000 5.80% Capital stock 2,000,000 2,000,000 - 0.00% 2,000,000 2,000,000 - 0.00% Retained earnings 900,000 964,800 (64,800) -7.20% 1,098,000 964,800 133,200 13.81% Total liabilities and equity 4 060 000 5 516 800 1 456 800 -35.88% 5 798 000 5 516 800 281 00 5.10% 2) *Highlighted amounts are over materiality. Prior Year Current Year Forecast Current Asset 2,560,000 2,850,800 2,932,000 Current Liability 560,000 2,152,000 2,300,000 Current Ratio 4.57 1.32 1.27 Prior Year Current Year Forecast Cost of goods sold 6,296,000 7,000,000 6,926,000 Ending inventory 1,500,000 1,350,000 1,500,000 Inventory Turnover 4.20 5.19 4.62 Prior Year Current Year Forecast Net sales-Cost of goods sold 2,704,000 2,720,000 2,974,000 Net Sales 9,000,000 9,720,000 9,900,000 Gross margin ratio 0.30 0.28 0.30