During the course of the audit of Nature Sporting Goods for the year ended December 31, 2007, the auditor discovered the following:
The accounts receivable confirmation work revealed one pricing error. The book value of $12,955.68 should be $11,984.00.The projected error based on this difference is $14,465. Nature Sporting Goods had understated the accrued vacation pay by $13,000. A review of the prior year documentation indicates the following uncorrected errors:
a. Accrued vacation pay was understated by $9,000.
b. Sales and accounts receivable were overstated by an estimated $60,000 due to cutoff errors.

Required
Prepare a summary of a possible adjustments schedule like the one in Exhibit and draw your conclusion about whether the aggregate effect of these errors is material. Nature Sporting Goods has made no adjustments to the trial balance numbers shown in Exhibit 16.4.

DEBIT (CREDIT ASSETS LIABILITIES W/P Retalned Net Current Noncurrent Crrent Noncurrent Earnings Earnings Uncorrected Known Errors Sales 972 Accounts Recelvable Error from A/R contirmations $972 known error and $13,493 additional (972) projected error) A-1 Accounts Payable 1,500 Cash (1,500) Unrecorded check # 14,389 Unknown Projected Errors B4 Sales 13,493 Accounts Recelvable (13,493) Projected pricing erors from sample Carryover Effect of Prior Year Errors U-3 Retained eanings 6,900 Salary Exp. Under accrual of prior year's salarles (6,900) Subtotal: Income before taxes 7,565 Tax Adjustment income Taxes Payable (14.465 x 0.34) 4,918 Income Tax Expense (7,565 x 0.34) Retained Earnings (6,900 x 0.34) (2,572) 2.346) Total Lkely Error Balance from Trlal Balance Total Likely Error as % or Balance (15.965) 0 6,418 0 4,554 4,993 19,073.000 1,997.000 (3,346,000) (13.048,000) (4,676,000) 1,678.000 0.08% 00% 0.19% 0.0% 0.1% 0.3% Conclusion: In my opinion, the total likely errors are not material to the financlal statements taken as a whole, and correcting the above errors is not necessary Marginal tax rate: 34% PREPARED BY DATE 10-17-08 REVIEWED BY LER DATE 10-22-08