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 in terms of actual dollar increases.
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 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 $2,600,000. This line of credit is the company's only interest-bearing debt.
5. Based on her discussions with management and 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.

Required:

b.Determine the expected amounts 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.)

W UDEN SUPPLY COMPANY Comparative Income Statements Years Ended December 20X1, 20X2, and 20X3 (Thousands) ts 20X1 Audited 20X2 Audited 20X3 Audited 20X4 Expected Sales 9,600 10,600 11,600 eBook Cost of goods sold 6,620 7,320 8,030 Gross profit 2,980 3,280 3,570 Sales commissions 670 740 810 Advertising 192 210 230 Salaries 1,076 1,100 1,124 Payroll taxes 187 194 20 Employee benefits 170 176 182 Rent 63 67 71 Depreciation 63 69 75 Supplies 29 34 39 Utilities 24 28 32 Legal and accounting 37 43 49 Miscellaneous 15 19 23 Interest expense 246 264 276 Net income before taxes + 208 336 458 Income taxes 47 76 103 Net income 161 260 355 $c. Uden's unaudited financial statements for the current year show a 30.78 percent gross profit rate. Assuming that this represents a misstatement from the amount that you developed as an expectation, calculate the estimated effect of this misstatement on net income before taxes for 20X4. (Enter your answers in thousands.) Expected misstatement