This is all one question please complete it in its entirety.

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 $3,600,000. 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. 20x4 Expected UDEN SUPPLY COMPANY Comparative Income Statements Years Ended December 20x1, 20x2, and 20x3 (Thousands) 20x1 20X2 Audited Audited Sales 12,600 13,500 Cost of goods sold 8,690 9,330 Gross profit 3,910 4,170 Sales commissions 880 950 Advertising 252 270 Salaries 1,126 1,160 Payroll taxes 197 203 Employee benefits 180 186 Rent 73 77 Depreciation 73 77 Supplies 39 43 Utilities Legal and accounting 47 51 Miscellaneous 25 29 Interest expense 366 384 Net income before taxes 618 702 Income taxes 139 158 Net income 479 544 20X3 Audited 14,400 9,970 4,430 1,010 290 1,194 209 192 81 81 47 42 55 33 396 800 180 620 34 38 Required: 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 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 30.76 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