Consider the following summary of unadjusted audit differences for Avni Co., a privately-held importer of fine wines with total assets of \(\$ 1.5\) million.

a. Which items do you think management will accept without much argument? Why?

b. Which items do you think management will be less willing to accept? Why?

c. What strategies might you employ to convince management to make the changes?

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Avni Co. Summary of Unadjusted Audit Differences Effect on Accounts: Debit (Credit) 12/31/07 Description (1) To accrue additional pension expense (2) To adjust inventory to reflect late-arriving goods shipped FOB shipping point (3) To adjust prepaid assets to reflect expiration of private club dues (4) To adjust revenue, cost of goods sold, inventory, and accounts receivable to reflect proper sales cutoff (5) To post unrecognized trade payables Totals Total Assets Liability Revenue Expense $84,500 ($84,500) $84,500 47,200 $47,200 700 (700) (49,990) 20,000 20,000 18,045 (18,045) (47,200) 700 $49,990 (20,000) 18,045 ($16,510) ($102,545) $49,990 $36,045