20X1 20X2 20X3 20X4 Sales 13500 14700 15900 17100 Cost of goods sold 9320 10150 11000 12172 Gross Profit 4180 4550 4900 4928 Sales Commission 950 1030 1110 1197 Advertising 270 290 320 342 Salaries 1141 1178 1215 1252 Payroll tax 200 209 218 227 Employee Benefit 183 192 201 210 Rent 76 78 80 82 Depreciation 76 78 80 82 Supplies 42 44 46 48 Utilities 37 39 41 43 Legal and Accounting 50 52 54 56 Miscellaneous 28 30 32 34 Interest expense 402 420 432 468 Net Income Before tax 725 910 1071 887 Income Tax 163 205 241 155 Net Income 562 705 830 732Expected misstatement = $342 Explanation: Sales ($15900 + $1200) = $17100 Cost of goods sold ($17,100 x .7118) = $12172 Sales commissions ($17100 x .07) = $1197 Advertising ($17100 x .02) = $342 Salaries ($1,215+ $32) = $1252 Payroll taxes ($218 + $9 = $227 Employee benefits ($201+ $9) = $210 Rent ($80 + $2) = $82 Depreciation ($80 + $2) = $82 Supplies ($46 + $2) = $48 Utilities ($41 + $2) = $43 Legal and accounting ($54 + $2) = $56 Miscellaneous ($32 + $2 = $34 Interest expense ($3,900 x 12%) = $469 Income taxes ($887 x 187) = $155 2 Expected Misstatement = 342 Actual GP 17100*30.82% =5270 Expected GP = 4928 = 342