Marilyn Terrill is the senior auditor for the audit of Uden Supply Company for the year ended December $31,20$X$4.$ 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:

Based on economic conditions, she believes that the increase in sales for the current year should approximate the historical trend.

Based on her knowledge of industry trends, she believes that the gross profit percentage for $204$ should be about $2$ percent less

than the percentage for $203.$

Based on her knowledge of regulations, she is aware that the effective tax rate for the company for $204$ has been reduced by $5$

percent from that in $203.$

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.

Based on her knowledge of economic conditions, she is aware that the effective interest rate on the company's line of credit for

$20$X$4$ was approximately $12$ percent. The average outstanding balance of the line of credit is $$4,600,000.$ This line of credit is the

company's only interest$-$bearing debt.

Based on her discussions with management 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.