Philly Communications is the largest provider of telephone and cable service in Pennsylvania. During its yearend audit, the manager at Dell & Wayne, Philly's independent audit firm determined that the appropriate amount for materiality at the financial statement level to be used during planning for the current year's audit is $1,000,000.Derek, a staff auditor at Dell & Wayne, is assigned the task of performing substantive tests on Philly's asset accounts. The following table summarizes Derek's findings. All the misstatements are overstatements.

Required:
1. When viewed independently of one another, do any of the actual misstatements in the individual asset accounts indicate a material misstatement that calls for an adjusting journal entry in Philly Communications' books?
2. Should Derek recommend adjusting journal entries to Philly's management? If so, what journal entry might Derek propose?
3. How does the concept of aggregate misstatement affect your answer?

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Account Cash Accounts Receivable Investments Inventory Buildings Prepaid Expenses Tolerable Misstatement Actual Misstatement 115,000 310,000 145,000 120.000 510,000 100,000 95,000 245,000 120,000 80.000 450,000 20,000