$1232.$ Simulation

Andy Watson, CPA, is a senior auditor on the audit of Carlson Inc. Andy is reviewing the results of analytical procedures related to inventory. For results $($a$),($b$),$ and $($c$),$ select the explanation that is most likely to be consistent with the change described. Explanations may be used once, more than once, or not at all.

Explanation:

Inventory increased as of year$-$end.

Debt outstanding increased.

A larger percentage of sales occurred during the last month of $20$X$8,$ as compared to $20$X$7.$

Interest expense increased during $20$X$8$ due to the acquisition of new debt.

The percentage of tax included in the provision for income taxes for $20$X$8$ is less than the percentage used in $20$X$7.$

Increases in costs of purchases were not completely passed on to customers through higher selling prices.

Owners$$ equity increased due to retention of profits.

Interest expense increased during $20$X$8.$

A significant amount of long$-$term debt became current at the end of $20$X$8.$

Inventory turnover $($as measured by cost of goods sold$/$ending inventory$)$ went from $7\mathrm{.}95$ in $20$X$7$ to $10\mathrm{.}52$ in $20$X$8.$ Which of the explanations is consistent with the change in inventory turnover?

Net income increased in $20$X$8.$ Which of the explanations is most consistent with the changes in net income?

The gross profit percentage $($gross profit$/$revenue$)$ changed from $\mathrm{.}166$ in $20$X$7$ to $\mathrm{.}154$ in $20$X$8.$ Which of the explanations is consistent with the change in gross profit percentage?