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: 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. 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. 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. Based on her knowledge of economic conditions, she is aware that the effective interest rate on the companys line of credit for 20X4 was approximately 12 percent. The average outstanding balance of the line of credit is $3,300,000. This line of credit is the companys only interest-bearing debt. 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. 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.) UDEN SUPPLY COMPANY Comparative Income Statements Years Ended December 20X1, 20X2, and 20X3 (Thousands) 20X1 Audited 20X2 Audited 20X3 Audited 20X4 Expected Sales 11,700 12,300 12,900 $13,500 Cost of goods sold 8,070 8,500 8,930 9,345 Gross profit 3,630 3,800 3,970 4,155 Sales commissions 820 860 900 Advertising 234 250 260 Salaries 1,111 1,142 1,173 Payroll taxes 194 208 222 Employee benefits 177 190 203 Rent 70 71 72 Depreciation 70 71 72 Supplies 36 37 38 Utilities 31 32 33 Legal and accounting 44 45 46 Miscellaneous 22 23 24 Interest expense 330 348 360 Net income before taxes 491 523 567 Income taxes 110 118 128 Net income 381 405 439 $0 c. Udens 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.)

Requlred: b. Determine the expected amounts for 204 for each of the income statement Items. (Round gross proflt ratio and Income taxes ratio to nearest four decimal places. Round other ratlos to nearest two decimal places. Round all other Intermedlate computatlons to the nearest whole value. Enter your answers in thousands.) c. Uden's unaudited financlal 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 204. (Enter your answers in thousands.)