Auditing Question

Auditing Chapter 7 You are auditing payroll for the Sinker Technologies company for the year ended October 31, 2019. Included next are amounts from the client's trial balance, along with comparative audited information for the prior year. 1 :(Click the icon to view the amounts from the trial balance.) 2 1 (Click the icon to view the additional information.) 3 Read the requirements 2 More Info - X Data Table - X You have obtained the following information to help you perform preliminary analytical procedures for the payroll account balances. There has been a significant increase in the demand for Sinker's products. The Audited Preliminary increase in sales was due to both an increase in the average selling price of 3 Balance Balance percent and an increase in units sold that resulted from the increased demand 10/31/2018 10/31/2019 and an increased marketing effort. Sales $ 56,038, 100 $ 63,883,434 2. Even though sales volume increased, there was no addition of executives, factory supervisors, or office personnel Executive salaries 492,811 666,049 3. All employees including executives, but excluding commission salespeople, Factory hourly payroll 10,603,817 11,004,992 received a 4 percent salary increase starting November 1, 2018. Commission salespeople receive their increased compensation through the increase in sales. Factory supervisors' salaries 690,022 759,699 4. The increased number of factory hourly employees was accomplished by recalling Office salaries 2,003,912 2,805,832 employees that had been laid off. They receive the same wage rate as existing employees. Sinker does not permit overtime. Sales commissions 2,294,812 3,059,893 5. Commission salespeople receive a 10 percent commission on all sales on which a *Sales have increased 14% over prior year. 3% percent of that is due to an commission is given. Approximately 90 percent of sales earn sales commission. increase in the average selling price. The remaining 11% is attributed to an The other 10 percent are "call-ins," for which no commission is given increase in the number of units sold. Commissions are paid in the month following the month they are earned. Print Done Print Done 3 0 Requirements - X a. Use the final balances for the prior year and the information in items 1 through 5 to develop an expected value for each account, except sales. (Round to the nearest whole dollar.) b. Calculate the difference between your expectation and the client's recorded amount as a percentage using the formula (expected value - recorded amount)/expected value. (Round to the nearest hundredth percent, XXX%.) Print DoneYou are auditing payroll for the Sinker Technologies company for the year ended October 31, 2019. Included next are amounts from the client's trial balance, along with comparative audited information for the prior year. (Click the icon to view the amounts from the trial balance.) i (Click the icon to view the additional information.) Read the (equirements (Note 1: When computing the expected value of factory hourly payroll, you must take into consideration both the 4% wage increase and the 11% increase in the number of units produced and sold. Note 2: Use the increase in the 10/31/2019 preliminary sales balance over the 10/31/2018 audited sales balance to determine the expected value for sales commissions on 10/31/2019.) Requirement a. Requirement b. (1) (2) [(2) - (1)] / (2) Preliminary Balance Expected Value Difference as a 10/31/2019 10/31/2019 Percentage Executive salaries 666,049 % Factory hourly payroll (see Note 1) 11,004,992 % Factory supervisors' salaries 759,699 Office salaries 2,805,832 % Sales commissions (see Note 2) 3,059,893