You are evaluating audit results for assets in the audit of Wizzards Manufacturing. You set the preliminary judgment about materiality at $45,000. The account balances, performance materiality, and estimated overstatements in the accounts are shown below. Requirement a. Assume you tested inventory amounts totaling $750,000 and found $15,000 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 Estimate of Total Overstatements Account Performance Balance Materiality 30,000 $ 1,500 $ 1,500,000 37,500 Cash $ 500 Accounts receivable 26,000 Inventory 2,200,000 240,000 44,000 6,000 1,000 Other assets $ 3,970,000 $ 89,000 2 Total 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 Are the overall financial statements acceptable? Explain. We can conclude that the overall financial statement Vacceptable because the total are are not estimated overstatement of assets exceeds the materiality amount. estimated overstatement of assets exceeds the total performance materiality. estimated overstatement of assets is less than the materiality amount. estimated overstatement of assets is less than the total performance materiality. Requirement c. What do you believe the auditor should do in the circumstances? O A. The auditor should conclude that total assets are fairly presented in all material respects. OB. The auditor should either propose an audit adjustment so that the unadjusted misstatement amount is less than the total performance materiality and/or perform more testing to obtain a better estimate of the population misstatements. O C. The auditor should either propose an audit adjustment so that the unadjusted statement amount is less than materiality and/or perform more testing to obtain a better estimate of the population misstatements. OD. None of the above