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The following errors, which all affect profit, have been identified by the auditor:
(1) Inventory overvalued by $100,000(2) Property, plant and equipment overvalued by $350,000(3) Trade payables overstated by $65,000
Problem 1: If materiality for the evaluation of misstatements is $200,000, what is the minimum amount of adjustment required in order to conclude that the financial statements are not materially misstated?
Option 1: $185,000
Option 2: $265,000
Option 3: $385,000
Option 4: $515,000
Financial Statement Analysis and Preparation
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