Your client, a reseller of electronic gadgets that it acquires in company liquidations,

has inventory that may be salable only at prices below its cost.

The client has already recognized a provision and allowance for $500,000.

The maximum tolerable misstatement [M] is $800,000.

You performed a test of the client's inventory for adequacy of its provision and allowance for obsolescence.

You selected and evalusted a monetary unit sample of inventory items.

The statistical evaluation of the amount of obselescent inventory is given below.

The client agrees with your findings

REQUIRED:

Based on the MUS results, draw an appropriate conclusion and recommendation (including journal entry) regarding the adequact of the client's provision and allowance.

[Your response should be clear, concise and complete.]

[10pts]