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 Summary of Unadjusted Differences. You have reviewed the working papers and determined that the following adjustments were not adjusted, and the client has not yet been asked to adjust any of the identified errors. Materiality is $150,000 and performance materiality is $120,000. Tolerable error is equal to performance materiality a) During the substantive testing, it was determined that revenue was overstated by $132,000 as a result of revenue being recognized in the wrong period. The test resulted in a total known and projected error of $197,000. b) During the substantive test related to testing the pricing of inventory held for resale, it was determined that there was an error related to the net realizable value of inventory resulting in inventory being understated. The testing resulted in an error of $97,000 and a total known and projected error of $130,000. c) During the search for unrecorded liabilities in was determined that an invoice for advertising was not recorded for $72,000. All cheques issued after the company's year-end were included in the test. d) During the review of legal expenses, it was noted that there was a legal bill for services provided related to a claim for a product defect filed during the current fiscal year. The lawsuit was settled out of court after the year-end for $52,000 and a provision of $40,000 was included in the financial statements being audited. Although the legal bill reviewed was included in legal expenses, management estimated that the lawyer has not billed the company for all of their fees related to the suit. The remaining fees are estimated to be $5,000. Required a) Enter each of the above items into the following table Description Assets Liabilities Revenue Expenses Total known errors Projected errors Total known projected error and a. Determine the total amount of unadjusted errors. b. Explain what conclusion can be reached and what additional steps need to be taken by the auditor in each of the following scenarios i. The Company is willing to adjust errors that are proven as factually wrong (known errors) ii. The Company is not willing to adjust any errors that have been determined