You have just finished audit testing and are gathering the evidence to determine if the audit work performed is sufficient and appropriate.The audit partner has asked you to analyze the errors identified in the file and determine what entries if any should be made on the Summary of Unadjusted Differences.You have reviewed the working papers and determined that the following items were not adjusted or disclosed in the financial statements, and the client has not yet been asked to adjust any of the identified errors or make additional disclosures in the financial statements.Materiality is $240,000 and performance materiality is $165,000.Tolerable error is equal to one-half of performance materiality.He also has asked you to determine what the preliminary effect of the errors found during the audit were on the financial statements and audit opinion.The Company's year end was December 31, 2019, and the expected board meeting to approve the financial statements will be February 29, 2020.The audit is expected to be finished on February 22, 2020.

a)During the completion of the audit and review of the minute book, it was determined that the Company had entered a contract to construct a building.The contract was signed on January 15, 2020, for $3,500,000 and construction will start in April 2020.

b)It was also discovered that an offer to purchase land was signed on December 28, 2019, by the Company and the seller on December 31, 2019, through review of the agreement.The agreement was conditional on obtaining financing by the company for $250,000, the purchase price of the land less the deposit already made.The bank forwarded a letter granting the company a line of credit for up to $5,000,000 on December 31, 2019, and it was signed by both parties on that date, but not returned to the bank until January 5, 2020.The Company had recorded the deposit paid on the land purchase of $50,000 under deposits on December 21, 2019.

c)The Company was being sued by a disgruntled employee for wrongful dismissal for $100,000.The employee filed the suit in October 2019.The company felt that it was not probable that the employee would be successful but offered him $3,000 as a settlement.The Company had not accrued for this amount as it was considered not be material.The legal letter you sent the Company's lawyer and returned by February 25, 2020, indicated that the lawyer's assessment was that there was at least an 80% chance of the employee being successful and being awarded between $25,000 and $60,000

d)During the substantive test related to testing the pricing of inventory held for resale, it was determined that there was an error in the cost of inventory items.It was determined that freight was not being included in the calculation where it was applicable.The test resulted in a known error of $120,000 and a total known and projected error of $171,000.

e)When conducting audit procedures on the estimate of the warranty provision, a recalculation of the Company's provision was performed based on statistics obtained from the industry association's website.Based on this, it appeared that the warranty provision was overstated by $50,000.