ACC 410 Week 2 Assignment Analytical Procedures

 You can find the work ACC 410 Week 1 Discussion Question 2 Audit Reports with the Analytical Procedures explanations and UDEN SUPPLY COMPANY Comparative Income Statement table in this file.

Business - Accounting
 Analytical Procedures

 In a 2-3 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. (50-100 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









 Salaries



 1,061



 1,082



 1,103









 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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