The auditor of ABX Wholesaling Company is evaluating audit results for assets in the audit. 

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:

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 preliminary materiality to decide the acceptability of the financial statements. Required: a. Ignoring sampling risk, what is the estimate of the total misstatement in Accounts Receivable? (2 marks) b. Whythe total performance materiality is not the same asthe preliminary materiality? Should they be equal? (2 marks) c. 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 believethe auditor should do in the circumstances? (4 marks)

Account Account balance Performance materiality Estimate of total overstatements Cash 50,000 5,000 6,000 Account receivable 1,500,000 30,000 ? Inventory 2,200,000 50,000 45,000 350,000 25,000 23,000 Other assets Total 4,090,000 110,000