Problem $13-7$

Required: Using Figure $13-6,$ Analytical Procedures for Accounts Payable and Purchases, as a guide:

$1.$ Perform analytical procedures you think appropriate for Singulair's December $31,2007,$ audit. For example, the balance sheets and statements of operations include in$$ formation that can be used to calculate the numbers of days' purchases in payables and payables turnover and to make several informative comparisons.

$2.$ Explain the results for each ratio or comparison. For example, an increase in payables turnover could signal overstated purchases or understated payables, among other things.

$3.$ Discuss substantive tests appropriate for the results explained in requirement $2.$ For example, an analytical procedure that signals overstated payables could prompt an auditor to increase the scope of cutoff testing.