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You are auditing payroll for the Harbor Creek Technologies company for the year ended October 31,2016 .Included next are amounts from the client's trial balance,

You are auditing payroll for the Harbor Creek Technologies company for the year ended October 31,2016 .Included next are amounts from the client's trial balance, along with comparative audited information for the prior year.

Audited Balance

Preliminary Balance

10/31/2015

10/31/2016

Sales

$56,038,100

$63,883,434

Executive salaries

530,284

630,599

Factory hourly payroll

10,594,822

10,958,864

Factory supervisors' salaries

760,800

837,567

Office salaries

2,239,582

2,694,881

Sales commissions

2,829,581

2,593,315

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Requirements

a.

Use the final balances for the prior year and the information in items 1 through 5 to develop an expected value for each account, except sales. (Round to the nearest whole dollar.)

b.

Calculate the difference between your expectation and the client's recorded amount as a percentage using the formula (expected value-recorded amount)/expected value. (Round to the nearest hundredth percent, X.XX%.)

More Info You have obtained the following information to help you perform preliminary analytical procedures for the payroll account balances. 1. There has been a significant increase in the demand for Harbor Creek's products. The increase in sales was due to both an increase in the average selling price of three percent and an increase in units sold that resulted from the increased demand and an increased marketing effort Even though sales volume increased there was no addition of executives, factory supervisors, or office personnel. All employees including executives, but excluding commission salespeople, received a six percent salary increase starting November 1, 2015. Commission salespeople receive their increased compensation through the increase in sales. 2. 3. 4. The increased number of factory hourly employees was accomplished by recalling employees that had been laid off. They receive the same wage rate as existing employees. Harbor Creek does not permit overtime. Commission salespeople receive a four percent commission on all sales on which a commission is given. Approximately 70 percent of sales earn sales commission. The other 30 percent are "call-ins," for which no commission is given. Commissions are paid in the month following the month they are earned. 5. PrintDone

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