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

b$.$ Determine the expected amounts for $204$ 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.$)$

$\backslash$table$[[$UDEN SUPPLY COMPANY$],[$Comparative Income Statements$],[$Years Ended December $20$X$1,20$X$2,$ and $20$X$3],[($Thousands$)],[,20$X$1$ Audited,$20\backslash$times $2$ Audited,$20$X$3$ Audited,$20$X$4$ Expected$],[$Sales$,14,100,15,500,16,900,],[$Cost of goods sold,$9,730,10,710,11,690,],[$Gross profit,$4,370,4,790,5,210,0],[$Sales commissions,$990,1,000,1,180,],[$Advertising$,282,310,340,],[$Salaries$,1,151,1,190,1,229,],[$Payroll taxes,$202,213,224,],[$Employee benefits,$185,196,207,],[$Rent$,78,82,88,],[$Depreciation$,78,82,88,],[$Supplies$,44,48,52,],[$Utilties$,38,43,47,],[$Legal and accounting,$52,56,60,],[$Miscellaneous$,30,34,38,],[$Interest expense,$428,444,458,],[$Net income before taxes,$813,1,002,1,205,],[$Income taxes,$183,225,271,],[$Net income,$830,777,934,$$$]]$

c$.$ Uden's unaudited financlal statements for the current year show a $30\mathrm{.}83$ percent gross profit rate. Assuming that this represents a misstatement from the amount that you developed as an expectation, calculate the estimated effect of thls misstatement on net Income before taxes for $204.($Enter your answers in thousands.$)$

Expected misstatement Choose the five most important varlances that do not meet the expected range and explain the auditing strategles and

techniques $($l$.$e$.,$ sampling or testing$)$ you would use to determine why.

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planning the audlt, Marllyn is attempting to develop expectations for planning analytical procedures based on the financia

information for prlor years and her knowledge of the business and the industry, Including these:

Based on economic conditions, she belleves 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 belleves 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 her knowledge of economic conditions, she is aware that the effective Interest rate on the company's line of

credit for $204$ was approximately $12$ percent. The average outstanding balance of the line of credit is $$4,100,000.$ Thiss

line of credit is the company's only Interest$-$bearing debt.

Based on her discussions with management and her knowiedge of the Industry, she belleves that the amount of other

expenses should be consistent with the trends from prlor years.

Comparative Income statement Information for Uden Supply Company is presented in the below table.

Required:

b$.$ Determine the expected amounts for $204$ 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

Intermedlate computatlons to the nearest whole value. Enter your answers in thousands.$)$