Answer parts A & B$.$ For part A please use the attached image. The audit staff of Adams, Barnes & Co$.($ABC$),$ CPAs, reported the following audit findings in their $20x5$ audit of

Keystone Computers & Networks $($KCN$)$ Inc.:

Unrecorded liabilities in the amount of $$6,440$ for purchases of inventory. These inventory items were counted

and included in the year$-$end total.

Projected misstatement from confirmation of accounts receivable in the amount of $$2,042$ understatement.

Projected misstatement from price tests of inventory of $$9,510$ overstatement.

The staff of ABC believes that the amount of KCN$\text{'}$s allowance for uncollectible accounts should be increased

by $$5,000.$

In addition, the audit staff has decided that for evaluating a material misstatement of the financial statements, the

following guidelines should be used:

Current assets$-$ $$50,000$

Noncurrent assets$-$ $$75,000$

Current liabilities$-$ $$50,000$

Noncurrent liabilities$-$ $$75,000$

Net income before taxes$-$ $$65,000$

a$.$ Prepare a schedule modeled after $$ Figure $16\mathrm{.}4$ to be used to evaluate the above audit findings,

assuming that KCN$\text{'}$s marginal tax rate is $25$ percent.

b$.$ Decide whether the results indicate that there is a sufficiently low risk of material misstatement to justify ABC's

audit opinion.