Week 4 – Individual Assignments – David Trejo
Week 4, individual assignments
Ch. 8: Comprehensive Questions 8-16 – Analytical procedures
In audit planning the audit of Circuits Technology, Inc. (CTI). CTI
resells, installs, and provides computer networking products (client software, gateway
hardware and software, and twinax hardware) to other businesses. Figure 8-14 provides
some summary information from CTI’s financial statements.
a. Calculate purchases, gross margin, inventory turn days, accounts receivable turn days, and accounts payable turn days for the
years ended 20x2, 20x3, 20x4, 20x5.
Inventory turn days:
A/R turn days:
A/P turn days:
b. Describe the trends identified by performing analytical procedures in the gross operating cycle, the net operating cycle, and
The identified trends from performing analytical procedures are: the expected range for inventory turn days is 7.94,
an improved collection period, an increase in inventory turn days, and an increase in gross margin.
The trends indicate that there was an increase in gross margin and a purchasing decrease, signaling that inventory