You are evaluating audit results for assets in the audit of Bradleys Manufacturing. You set the preliminary judgment about materiality at $75,000. The account balances, performance materiality, and estimated overstatements in the accounts are shown below.

Read the requirements!

a.	Assume you tested inventory amounts totaling $600,000 and found $24,000 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? Explain.
c.	What do you believe the auditor should do in the circumstances?

Requirement a. Assume you tested inventory amounts totaling $600,000 and found $24,000 in overstatements. Ignoring sampling risk, what is your estimate of the total misstatement in inventory? (Do not round intermediary calculations. Only round the amount you enter in the input field to the nearest dollar.)

Account	Account Balance	Performance Materiality	Estimate of Total Overstatements
Cash	$110,000	$5,500	$3,500
Accounts receivable	1,100,000	55,000	28,000
Inventory	3,400,000	68,000
Other assets	290,000	20,300	13,300
Total	$4,900,000	$148,800	?

Requirement b. Based on the audit of the assets accounts and ignoring other accounts, are the overall financial statements acceptable? Explain.

Start by identifying the estimate of the total overstatement based on the audit of the assets accounts and ignoring other accounts.

Estimate of total overstatement