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…showed last 75 words of 769 total…earnings from operations which came to be $18,927,00. I felt that 20% of this amount would be considered material $18,927,000*20%= $3,785,400 Tolerable misstatement for each account can not exceed: 60%* $3,785,400 = $2,271,240 Sum of tolerable misstatement: 2 * $3,785,400 = $7,570,800 Allocation: Current Assets Cash $110,000 Short term investments 0 Receivables 2,271,240 Merchandise inventories 2,271,240 Prepaid Expenses 0 PP&E 110,000 Other Assets 110,000 Current Liabilities Accounts Payable 1,000,000 Short-term debt 388,320 Unearned Revenue 0 Accrued Expenses 0 Long Term Liabilities Long-term debt 1,200,000 Unearned Revenue 110,000 Equity Common Stock 0 Additional paid in capital 0 Retained Earnings 0 Total misstatement $7,570,800 ------------------------------------------------------------------------ **Bibliography**