The following items were discovered during December 31, 2022, audit of the financial statements of Star Artificial Intelligence:

1. The company's financial statements did not include an accrual for bonuses earned by senior management in 2022 but payable in March 2023. The aggregate bonus amount was $143,000.

2. Equipment originally costing $1,100,000 that was fully depreciated with a remaining residual value of $89,000 was sold for $125,000 on December 29, 2022. The purchaser agreed to pay for the equipment by January 15, 2023.

3. Based on close examination of the client's aged accounts receivable trial balance and correspondence files with customers, the auditor determined that management's allowance for uncollectible accounts is overstated by $76,000.

4. Expenses totaling $84,000 associated with the maintenance of equipment were inappropriately debited to the equipment account.

5. Marketing expenses of $97,000 were incorrectly classified as the cost of goods sold.

6. The company received new computer equipment on January 3, 2023, that had been ordered and shipped F.O.B. shipping point to Gibraltar on December 27, 2022. No entry has been recorded for this purchase, which was financed by a long-term note payable due in full September 30, 2024.

Requirements: A. Prepare an Unadjusted Misstatement Audit Schedule using the following format: Possible Misstatement - Overstatement (Understatement) Total Current Non-Current Current Non-Current Income Amount Assets Assets Liabilities Liabilities Before Tax

B. Balance sheet and income statement materiality for the audit of Star Artificial Intelligence financial statements is $100,000. What is your conclusion about the financial statements if the audit findings are not corrected by Star Artificial Intelligence management before you issue the audit report?