Using your preliminary analytics for Problem 4.56, identify each significant account and disclosure.

Using Exhibit 4.12 as a guide, for each significant identified in #1 above, list three things that could go wrong for that account.

Using 4.12 as a guide, for each of the three things that you list for each significant account, indicate the relevant assertion.

Assuming that the audit risk is high for this client, calculate performance materiality and allocate this materiality to each balance sheet account except retained earnings. Use the guidelines in the policy statement for Lilts Berger & Associates on Page 6 of the Oceanview booklet.

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Home A44 · Paste 7 0 Insert Draw Page Layout 4 Exhibit 4.56.1 5 Dunder-Mifflin, Inc. 6 Unaudited Financial Information 20 ASSETS: 21 Cash 8 9 REVENUE AND EXPENSE: 10 Sales (net) 11 Cost of goods sold 12 Gross margin 13 General expense 14 Depreciation 15 Operating income 16 Interest expense 17 Income taxes (40%) 18 Net income 19 Calibri (Body) B I U 36 Long-term debt, 10% 37 Total liabilities 22 Accounts receivable 23 Allowance doubtful accounts 24 Inventory 25 Total current assets 26 Fixed assets 27 Accum. depreciation 28 Total assets 29 30 LIABILITIES AND EQUITY: 31 Accounts payable 32 Bank loans, 8% 33 Accrued interest 34 Accruals and other 35 Total current liabilities V 38 Capital stock 39 Retained earnings 40 Total liabilities and equity 41 42 43 44 Significant disclosures required 45 fx Significant disclosures required B 9720000 7000000 2720000 2003000 334000 383000 75000 123200 184800 11 690800 900000 -90000 1350000 2850800 4500000 -1834000 5516800 Formulas 330000 1750000 40000 32000 2152000 400000 2552000 2000000 964800 5516800 Y A A ✓ A с Data Current Year Significant account Inherent risk (Unaudited) Y/N H/M/L 10 D Review View % | € 3 E Three things that could go wrong Screen Shot 2020-0 Tell me ab Wrap Text Merge & Center ✓ F G Genera $ Relevant assertion Materiality V Home A44 · Paste 7 0 Insert Draw Page Layout 4 Exhibit 4.56.1 5 Dunder-Mifflin, Inc. 6 Unaudited Financial Information 20 ASSETS: 21 Cash 8 9 REVENUE AND EXPENSE: 10 Sales (net) 11 Cost of goods sold 12 Gross margin 13 General expense 14 Depreciation 15 Operating income 16 Interest expense 17 Income taxes (40%) 18 Net income 19 Calibri (Body) B I U 36 Long-term debt, 10% 37 Total liabilities 22 Accounts receivable 23 Allowance doubtful accounts 24 Inventory 25 Total current assets 26 Fixed assets 27 Accum. depreciation 28 Total assets 29 30 LIABILITIES AND EQUITY: 31 Accounts payable 32 Bank loans, 8% 33 Accrued interest 34 Accruals and other 35 Total current liabilities V 38 Capital stock 39 Retained earnings 40 Total liabilities and equity 41 42 43 44 Significant disclosures required 45 fx Significant disclosures required B 9720000 7000000 2720000 2003000 334000 383000 75000 123200 184800 11 690800 900000 -90000 1350000 2850800 4500000 -1834000 5516800 Formulas 330000 1750000 40000 32000 2152000 400000 2552000 2000000 964800 5516800 Y A A ✓ A с Data Current Year Significant account Inherent risk (Unaudited) Y/N H/M/L 10 D Review View % | € 3 E Three things that could go wrong Screen Shot 2020-0 Tell me ab Wrap Text Merge & Center ✓ F G Genera $ Relevant assertion Materiality V