Planning the Audit

Develop the expected amounts for 20X4 for each of the income statement items

(based on what she believes in 1-6 above). 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.