Week#4++-Individual+Answer+Form[1]

Week#4++-Individual+Answer+Form[1] - 8-16(Analytical...

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(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. Required 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. Purchases 2002 = 2,993 2003 = 2,171 2004 = 1,827 2005 = 1,883 Gross margin% 2002 = 52.3% 2003 = 48.1% 2004 = 52.2% 2005 = 52.4% Inventory Turn-over days 2002 = 160 2003 = 185 2004 = 199 2005 = 199 Accounts Receivable Turn-over Days 2002 = 70 2003 = 97 2004 = 95 2005 = 83 Accounts Payable Turn-over Days 2002 = 33 2003 = 51 2004 = 43 2005 = 36 b. Describe the trends identified by performing analytical procedures in the gross operating cycle, the net operating cycle, and gross margin. Increases in inventory turn days Increase in gross margin improved collection period c. If tolerable misstatement is $45,000 for inventory, develop an expectation range for inventory turn days. Tolerable Misstatement / Cost of Goods Sold X 365 = 45 / 1,859 X 365 =
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This note was uploaded on 04/17/2011 for the course ACCOUNTING 490 taught by Professor Santos during the Spring '11 term at University of Phoenix.

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Week#4++-Individual+Answer+Form[1] - 8-16(Analytical...

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