Question 4 (12 marks) The auditor of ABX Wholesaling Company is evaluating audit results for assets in the audi t. The auditor has set the preliminary judgment about materiality of $ 76,000. The account balances, performance materiality and estimated overstatements in the accounts are shown below: Account Account balance Performance materiality Estimate of total overstatements 50,000 5,000 6,000 Cash Account receivable 1,500,000 30,000 ? ? 2,200,000 50,000 45,000 Inventory Other assets Total 25,000 23,000 350,000 4,090,000 110,000 The auditor has chosen a sample of $300,000 in Accounts Receivable. He tested it and uncovered $600 in overstatement. He then checked on the individual accounts and all accounts in the total assets against the allocated performance materiality and the preliminat materiality to decide the acceptability of the financial statements. a. b. Required: Ignoring sampling risk, what is the estimate of the total misstatement in Accounts Receivable? (2 marks) Why the total performance materiality is not the same as the preliminary materiality Should they be equal? (2 marks) Based on the audit of the asset accounts and ignoring other accounts, are the overall financial statements acceptable? Please show workings to support the conclusion. (4 marks) d. What do you believe the auditor should do in the circumstances? (4 marks) C