Marilyn Terrill is the senior auditor for the audit of Uden Supply Company for the year ended December 31, 20X4. In planning the audit, Marilyn is attempting to develop expectations for planning analytical procedures based on the financial information for prior years and her knowledge of the business and the industry, including these: 1. Based on economic conditions, she believes that the increase in sales for the current year should approximate the historical trend. 2. Based on her knowledge of industry trends, she believes that the gross profit percentage for 20X4 should be about 2 percent less than the percentage for 20X3. 3. Based on her knowledge of regulations, she is aware that the effective tax rate for the company for 20X4 has been reduced by 5 percent from that in 20x3. 4. Based on a review of the general ledger, she determined that average depreciable assets have Increased by 10 percent. Purchases of equipment occurred relatively evenly throughout the year. 5. Based on her knowledge of economic conditions, she is aware that the effective interest rate on the company's line of credit for 20X4 was approximately 12 percent. The average outstanding balance of the line of credit is $2,800,000. This Inc of credit is the company's only interest-bearing debt. 6. Based on her discussions with menagement the advertising and sales commission percentages are expected to stay the same. Based on her knowledge of the industry, she believes that the amount of other expenses should be consistent with the trends from prior years. Comparative income statement information for Uden Supply Company is presented in the below table. UDEN SUPPLY COMPANY Comparative Incase Staterents Years Ended December 28x1, 28x2, and 2003 Thousands 2801 20x2 Audited Audited 28x3 Audited 2004 Expected Sales 3W,ORM 11,400 17,ten Cost of goods sold 7,048 7,800 8,728 Gross profit Advertising 1,168 3,528 Sales conmissions 710 800 888 204 230 250 Salaries 1,086 1,112 1,138 Payroll taxes 189 198 207 Paployee benefits 177 100 Rent 65 G6 67 Depreciation 65 66 67 Supplies 31 32 33 26 27 281 Legal and accounting 39 41 Miscellaneous 17 18 19 Interest expense 278 288 300 Net income before taxes 286 463 642 Incase taxes 64 184 149 Net income 227 359 523 Required: b. Determine the expected emounts for 20X4 for each of the income statement items. (Round gross profit ratio and income taxes ratio to nearest four decimal places. Round other ratios to nearest two decimal places. Round all other intermediate computations to the nearest whole value. Enter your answers in thousands.) Sales UDEN SUPPLY COMPANY Comparative Income Statements Years Ended December 20X4 (Thousands) Cost of goods sold Gross profit Sales commissions Advertising Salaries Payroll taxes Employee benefits Rent Depreciation Supplies Utilities 0 Legal and accounting Miscellaneous Interest expense Net income before taxes Income taxes Net income $ 0