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 $3,900,000. This line of credit is the company's only interest-bearing debt. 6. 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. UDEN SUPPLY COMPANY Comparative Income Statements Years Ended December 20X1, 20x2, and 20x3 (Thousands) 20x3 20x4 20x1 20x2 Expected Audited Audited Audited Sales 15,900 11,000 4,900 1,110 13,500 9,320 4,180 950 270 14,700 10,150 4,550 1,030 290 1,178 209 Cost of goods sold Gross profit Sales commissions Advertising Salaries 320 1,141 200 1,215 218 Payroll taxes Employee benefits Rent 183 192 201 76 78 80 Depreciation Supplies Utilities 76 78 80 42 46 44 37 39 41 Legal and accounting Miscellaneous 50 52 54 28 30 32 Interest expense Net income before taxes 420 402 432 1,071 725 910 Income taxes 163 205 241 562 705 830 Net income Requlred: b. Determine the expected amounts for 20X4 for each of the income statement items. (Round gross profit ratlo and Income taxes ratlo to nearest four decimal places. Round other ratlos to nearest two decimal places. Round all other Intermedlate computations to the nearest whole value. Enter your answers In thousands.) UDEN SUPPLY COMPANY Comparative Income Statements Years Ended December 20X4 (Thousands) Sales Cost of goods sold Gross profit Sales commissions Advertising Salaries Payroll taxes Employee benefits Rent Depreciation Supplies Utilities Legal and accounting Miscellaneous Interest expense Net income before taxes Income taxes Net income c. Uden's unaudited financial statements for the current year show a 30.82 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