Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

You are evaluating audit results for assets in the audit of Roberts Manufacturing. You set the preliminary judgment about materiality at $50,000. The account balances,

You are evaluating audit results for assets in the audit of Roberts Manufacturing. You set the preliminary judgment about materiality at $50,000. The account balances, tolerable misstatement, and estimated overstatements in the accounts are shown next: Account Account balance Tolerable Misstate Est. of Total overstatement Cash $50,000 $5,000 $1,000 Account Rec. $1,200,000 $30,000 $20,000 Inventory $2,500,000 $50,000 ? Other assets $250,000 $15,000 $12,000 Total $4,000,000 $100,000 ? a. Assume you tested inventory amounts totaling $1,000,000 and found $10,000 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?

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Accounts And Audit Of Limited Liability Partnerships

Authors: Steve Collings

4th Edition

1847669913, 978-1847669919

More Books

Students also viewed these Accounting questions

Question

5. Identify three characteristics of the dialectical approach.

Answered: 1 week ago