Question Completion Status: queLUIT 30 points Save Ans You are evaluating audit results for assets in the audit of Wellington Milk and Meat Processing Ltd. You set the preliminary judgement about materiality at $60,000. The account balances, performance materiality and estimated overstatements in the accounts are shown below: Account Account balance Performance Estimate of total materiality overstatements $ $ 1,000 777 Cash Accounts receivable Inventory Other assets Total 50,000 1.200,000 3.000.000 250.000 10,000 35,000 55.000 20,000 120.000 12.000 Required: a. Assume you tested Accounts receivable balance and Inventory balance totalling $600.000 and $2 million respectively. Your test results shows that $9.000 and $25,000 overstatement in Accounts receivable balances, and Inventory balances respectively. Ignoring sampling risk, estimate the total misstatement in Accounts receivable balances and Inventory balances? (12 marks) b. Based on the audit of the asset accounts and ignoring other accounts, are the overall financial statements materially misstated? Explain. (6 marks) c. What do you believe the auditor should do in the above circumstances? (12 marks) TT T Arial 3 (121) T.EE Question Completion Status: queLUIT 30 points Save Ans You are evaluating audit results for assets in the audit of Wellington Milk and Meat Processing Ltd. You set the preliminary judgement about materiality at $60,000. The account balances, performance materiality and estimated overstatements in the accounts are shown below: Account Account balance Performance Estimate of total materiality overstatements $ $ 1,000 777 Cash Accounts receivable Inventory Other assets Total 50,000 1.200,000 3.000.000 250.000 10,000 35,000 55.000 20,000 120.000 12.000 Required: a. Assume you tested Accounts receivable balance and Inventory balance totalling $600.000 and $2 million respectively. Your test results shows that $9.000 and $25,000 overstatement in Accounts receivable balances, and Inventory balances respectively. Ignoring sampling risk, estimate the total misstatement in Accounts receivable balances and Inventory balances? (12 marks) b. Based on the audit of the asset accounts and ignoring other accounts, are the overall financial statements materially misstated? Explain. (6 marks) c. What do you believe the auditor should do in the above circumstances? (12 marks) TT T Arial 3 (121) T.EE