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(solution) Need this done today with explanations of calculations. Please so


Need this done today with explanations of calculations. Please so not copy other work from other sites.I only need the comparative analysis done not the entire paper or the questions. 


Analytical Procedures

 

In a 2­3 page paper, complete the case below and submit to instructor. Review the income statement for Uden Supply Company and answer the following: Describe the purpose of analytical procedures performed in the planning stage of the audit. 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 operating performance 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. Uden?s unaudited financial statements for the current year show a 31 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. Indicate whether you belive that the difference calculated in part (c) is material. Explain your answer. (50­100 words). Comparative income statement information for Uden Supply Company is presented in the accompanying table. UDEN SUPPLY COMPANY

 

Comparative Income Statement

 

Years Ended December 20X1, 20X2, and 20X3

 

(Thousands) 20X1

 

Audited 20X2

 

Audited 20X3

 

Audited 20X4

 

Expected Sales 8,700 9,400 10,100 Cost of goods sold 6,000 6,500 7,000 Gross profit 2,700 2,900 3,100 Sales Commissions 610 660 710 Advertising 175 190 202 1,061 1,082 1,103 Salaries Payroll taxes 184 192 199 Employee benefits 167 174 181 Rent 60 61 62 Depreciation 60 63 66 Supplies 26 28 30 Utilities 21 22 23 Legal and accounting 34 37 40 Miscellaneous 12 13 14 Interest expense 210 228 240 Net income before taxes 80 150 230 Incomes taxes 18 33 50 Net income 62 117 180

 


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