Uden Supply has projected its 2004 gross profit at 31% of sales despite expectation for some shrinkage in margins. On the basis of Uden's operatingperformance in years 2001 - 2003 project your best guess for 2004. Project 2004 based on the incremental changes for each line item over the last three years.

The Percentages used in calculating the expected, next year results, how are these calculated?

ACC 410: Auditing - Week 2 Assignment 1. There is a need for analytical procedures in the audit planning stage to determine any risks that may arise and analyzing how to reduce the risk of missing key data. This is an important part of the planning stage and assists the auditors in identifying significant events, uncommon transactions, and large balance variances between two or more years of financial statements. This is when the initial understanding of the client begins and the first chance to detect fraud. 2. UDEN SUPPLY COMPANY Comparative Income Statement Years Ended December 20X1, 20X2, and 20X3 (Thousands) 20X1 Audited 20X2 Audited 20X3 Audited 20X4 Expected $10,800 10,800 = 10,100+700 700=10,100-9,400 OR 9,400-8,700 Sales 8,700 9,400 10,100 Cost of goods sold 6,000 6,500 7,000 $7,468 10,800*.6915 Gross profit 2,700 2,900 3,100 $3,332 10,800-7,468 Sales Commissions 610 660 710 $756 10,800*.07 Advertising 175 190 202 $216 10,800*.02 Salaries 1,061 1,082 1,103 $1,124 1,103+21 Payroll taxes 184 192 199 $207 199+8 Employee benefits 167 174 181 $188 181+7 Rent 60 61 62 $63 62+1 Depreciation 60 63 66 $69 66+3 Supplies 26 28 30 $32 30+2 Utilities 21 22 23 $24 23+1 Legal and accounting 34 37 40 $43 40+3 Miscellaneous 12 13 14 $15 14+1=15 14-13=1 Interest expense 210 228 240 $252 240+12=252 240-228=12 Net income before taxes 80 150 230 $2,989 Incomes taxes 18 33 50 $75 343*.22 Net income 62 117 180 $268 3. $10,800* .31 = $3,348 Gross Profit $3,348 - $3,332 (expected 20x4 Gross Profit) = $16 expected misstatement 4