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Your comparison of the gross margin percent for Jonier Drugs for the years 2013 through 2016 indicates a significant decline. This is shown by the following information: (Click the icon to view the information.) The following additional information is obtained from independent sources and the client's records as a means of investigating the controller's explanations: (i) (Click the icon to view the additional information) Requirements a. Evaluate the explanation provided by Amberson. Show calculations to support your conclusions. b. Which specific aspects of the client's financial statements require intensive investigation in this audit? Requirement a. Evaluate the explanation provided by Amberson. Show calculations to support your conclusions. First, compute the gross margin percentage for drug sales for 2016 through 2013, then, compute the gross margin percentage for nondrug sales for 2016 through 2013. (Round your answers to the nearest tenth percent, XXX%.) Drugs 2016 2015 2014 20132016 2015 2014 2013 Sales (thousands) 15,225 $ 14,025 $ 12,375 11,400 CGS (thousands) 9.835 8.948 7.846 7,205 Gross margin 5,390 5,077 $ 4.529 $ 4,195 Percent 35.4 36.2 36.6 36.8 A discussion with Madison Amberson, the controller, brings to light two possible explanations. She informs you that the industry gross profit percent in the retail drug industry declined fairly steadily for three years, which accounts for part of the decline. A second factor was the declining percent of the total volume resulting from the pharmacy part of the business. The pharmacy sales represent the most profitable portion of the business, yet the competition from discount drugstores prevents it from expanding as fast as the nondrug items such as magazines, candy, and many other items sold. Amberson feels strongly that these two factors are the cause of the decline. Print Done More Info Industry Gross Jonier Drugs ($ in thousands) Profit Percent for Drug Cost of Nondrug Cost Retailers of Drugs Drug Sales Nondrug Sales Goods Sold of Goods Sold and Related Products 2016 5,085 10.140 3.010 $ 6,915 32.8 2015 5,140 8.885 2,955 6,060 32.9 2014 4,894 7.481 2,829 5,117 33.2 2013 4.788 6,612 2,758 4,529 33.4Requirements a. Evaluate the explanation provided by Amrock. Show calculations to support your conclusions. b. Which specific aspects of the client's financial statements require intensive investigation in this audit? Requirement a. Evaluate the explanation provided by Amrock. Show calculations to support your conclusions. First, compute the gross margin percentage for drug sales for 2016 through 2013, then, compute the gross margin percentage for nondrug sales for 2016 through 2013. (Round your answers to the nearest tenth percent, XXX%.) Drugs Nondrugs 2016 2015 2014 2013 The explanation given by Amrock is The gross margin percentage for nondrugs For drugs, the percent The percent for drugs had before 2016. The change in the gross margin percent for drug in 2016 could be due to the fact that Requirement b. Which specific aspects of the client's financial statements require intensive investigation in this audit? As the auditor, you accept Amrock' explanation if the decline is material. The decline in gross margin could be due to Further investigationYour comparison of the gross margin percent for Jamberson Drugs for the years 2013 through 2016 indicates a significant decline. This is shown by the following information: (Click the icon to view the information.) The following additional information is obtained from independent sources and the client's records as a means of investigating the controller's explanations: i (Click the icon to view the additional information.) Requirements a. Evaluate the explanation provided by Ackers. Show calculations to support your conclusions. b. Which specific aspects of the client's financial statements require intensive investigation in this audit? Requirement a. Evaluate the explanation provided by Ackers. Show calculations to support your conclusions. First, compute the gross margin percentage for drug sales for 2016 through 2013, then, compute the gross margin percentage for nondrug sales for 2016 through 2013. (Round your answers to the nearest tenth percent, XX.X%.) Drugs 2016 % Data Table - X More Info - X 2015 % 2014 % 2013 2016 2015 2014 201 Industry Gross Sales (thousands) S 14,075 S 12,775 S 11,275 $ 10,300 Jamberson Drugs ($ in thousands) Profit Percent for CGS (thousands) 8,966 8,035 7,058 6,407 Drug Cost of Nondrug Cost Retailers of Drugs Gross margin 5,109 4,740 4,217 3,893 Drug Sales Nondrug Sales Goods Sold of Goods Sold and Related Products Percent 36.3 37.1 37.4 37.8 2016 S 5,700 $ 8,375 $ 3,699 $ 5,653 33.8 2015 5,583 7.192 3,523 4.855 34.0 A discussion with Mary Ackers, the controller, brings to light two possible explanations. She informs you that the industry gross profit percent in the retail drug industry declined fairly steadily for 2014 5,243 6.032 3,324 4.078 34.3 three years, which accounts for part of the decline. A second factor was the declining percent of the total volume resulting from the pharmacy part of the business. The pharmacy sales represent the most 2013 5,047 5,253 3,185 3,562 34.5 profitable portion of the business, yet the competition from discount drugstores prevents it from expanding as fast as the nondrug items such as magazines, candy, and many other items sold. Ackers feels strongly that these two factors are the cause of the decline Print Done Print Done Enter any number in the edit fields and then click Check Answer.2019 2018 2017 2016 Sales (thousands) $ 13,900 12,500 10,900 $ 10,100 8,757 7,800 6,769 6,242 068 (thousands) Gross margin 5,143 4,700 4,131 $ 3,858 Percent 37.0 37.6 37.9 38.2 A discussion with Marlene Ackers, the controller, brings to light two possible explanations. She informs you that the industry gross prot percent in the retail drug industry declined fairly steadily for three years, which accounts for part of the decline. A second factor was the declining percent of the total volume resulting from the pharmacy part of the business. The pharmacy sales represent the most protable portion of the business, yet the competition from discount drugstores prevents it from expanding as fast as the nondrug items such as magazines, candy, and many other items sold. Ackers feels strongly that these two factors are the cause of the decline. 2019 2013 2017 2016 $ Drug Sales 5,345 5,200 4,840 4,747 Jiligan Drugs ($ in thousands) Nondrug Sales $ 8,555 7,300 6,060 5,353 Drug Cost of $ Goods Sold 3,138 $ 2,980 2,788 2,730 Nondrug Cost of Goods Sold 5,706 4,869 4,048 3,592 Industry Gross Profit Percent for Retailers of Drugs and Related Products 34.4 34.5 34.6 34.9 Your comparison of the gross margin percent for Jiligan Drugs for the years 2016 The following additional information is obtained from independent sources and the through 2019 indicates a signicant decline. This is shown by the following client's records as a means of investigating the controller's explanations: information: 0 (Click the icon to view the additional information.) E (Click the icon to view the data and additional discussion with the controller.) Read the EM. Requirement a. Evaluate the explanation provided by Ackers. Show calculations to support your conclusions. Begin by computing the gross margin percentage for drug and nondrug sales for 2019 through 2016. (Round your answers to the nearest tenth percent, XX.X%.) Gross margin % - Gross margin % - Year Drug sales Nondrug sales 2019 I % % 2018 I % % 2017 I % % 2016 I % %
