19 In the audit of the Worldwide Wholesale Company, you did extensive ratio and trend analysis as part of preliminary audit planning. Your analytical procedures identified the following situations: a) Commission expense as a percent of sales was constant for several years but has increased significantly in the current year. b) The rate of inventory turnover has steadily decreased for three years and inventory as a percent of current assets has steadily increased for four years. c) The number of days' sales in accounts receivable has steadily increased for three years. d) The allowance for uncollectible accounts as a percent of accounts receivable has steadily decreased for three years. e) The absolute amounts of depreciation expense and depreciation expense as a percent of gross fixed assets are significantly smaller than the preceding year. f) Long-term debt increased from the prior year, but total interest expense decreased as a percentage of long-term debt. g) Gross profit percent was constant for several years but has increased significantly in the current year. Below, items 1 through 12, are possible explanations for each of the observed changes in financial statement amounts and ratios. 1) Depreciation expense may be understated for the current year. 2) Sales are overstated for the current year. 3) Obsolete or unsalable inventory may be present. 4) Portions of existing long-term debt were refinanced at lower interest rates. 5) A significant amount of fixed assets may be fully depreciated. 6) Commission expense was calculated incorrectly in one or more years. 7) Selling, general and administrative expenses were lower this year relative to prior years. 8) The Company is selling its product on credit and taking longer to collect the money. 9) There was a change in the sales commission rate during the current year. 10) The allowance for uncollectible accounts may be understated. 11) Cost of goods sold is understated for the current year. 12) Short-term borrowings were refinanced on a long-term basis at lower interest rates. Required. For each of the observed situations above (a through g), select the most likely explanation(s) from the list above (1 through 12) and complete the table below. Situation Explanation # a b d e f