This Assignment requires that you prepare an Excel Spreadsheet - similar to one that would be used in practice in the planning phase of the audit. The auditor must first develop an expectation, usually based on the performance in the prior period (taking into consideration any unusual circumstances in the current period). We will assume no unusual circumstances in the current period. This company is a new and growing company, and we would expect sales to increase in the current period (compared to the previous period). Requirements: (a) Prepare common size Income Statements and Balance Sheets for the prior and current periods. (b) Based on the relationships in the prior period Income Statements and assuming Sales of $900,000, calculate the expected amounts (dollar amounts) for the various expense accounts (including COGS). All calculations should be completed in the Excel spreadsheet. (c) Prepare a column that shows the dollar difference between our expected amounts and actual amounts (for expense accounts and COGS). Assuming that the tolerable misstatement for planning purposes on the audit is $ 15,000 highlight accounts that will require more extensive examination and testing (based only on this particular measure). (d) Some income statement accounts are better analyzed by looking at their relationship to balance sheet accounts (and vice versa). For example, the investment income (an income statement account) is dependent on rates of return and changes in the Investment account (a balance sheet account). In the Foxx Statements, there has been no change in the amount of their investment, so it is reasonable that there has been little change in the Investment Income account. Using the Foxx Corporation Financial Statements, provide a similar example and an explanation of the relationship.

You should name this spreadsheet using the naming convention "yourname.xlsx" This Assignment requires that you prepare an Excel Spreadsheet - similar to one that would be used in practice in the planning phase of the audit. The auditor must first develop an expectation, usually based on the performance in the prior period (taking into consideration any unusual circumstances in the current period). We will assume no unusual circumstances in the current period. This company is a new and growing company, and we would expect sales to increase in the current period (compared to the previous period). Requirements: (a) Prepare common size Income Statements and Balance Sheets for the prior and current periods. (b) Based on the relationships in the prior period Income Statements and assuming Sales of $900,000, calculate the expected amounts (dollar amounts) for the various expense accounts (including COGS). All calculations should be completed in the Excel spreadsheet. (c) Prepare a column that shows the dollar difference between our expected amounts and actual amounts (for expense accounts and COGS). Assuming that the tolerable misstatement for planning purposes on the audit is $ 15,000 highlight accounts that will require more extensive examination and testing (based only on this particular measure). (d) Some income statement accounts are better analyzed by looking at their relationship to balance sheet accounts (and vice versa). For example, the investment income (an income statement account) is dependent on rates of return and changes in the Investment account (a balance sheet account). In the Foxx Statements, there has been no change in the amount of their investment, so it is reasonable that there has been little change in the Investment Income account. Using the Foxx Corporation Financial Statements, provide a similar example and an explanation of the relationship. Name: Foxx Corporation Financial Statements For Year Ended December 31, 2011 and 2012 Requirement: (a) Prior Yr. Common Size (b) Current Yr. Expected (a) Current Yr. Current Yr. Actual Common Size 900,000 90,000 80,000 113,000 23,000 20,500 614,500 Income Statement Sales Cost of Goods Sold Depreciation Expense Administrative Expenses Miscellaneous Expenses Investment Income Net Income Prior Yr. Actual $ $ $ $ $ $ $ Statement of Changes in Retained Earnings Retained Earnings, Beginning Net Income Dividends Paid Retained Earnings, Ending $ $ $ $ 700,000 520,000 120,000 1,100,000 1,100,000 614,500 120,000 1,594,500 Balance Sheet Cash Accounts Receivable Inventory Investments Buildings and Equipment (net) Land Total Assets $ $ $ $ $ $ $ 225,000 200,000 75,000 900,000 900,000 600,000 2,900,000 648,000 284,500 92,000 900,000 820,000 600,000 3,344,500 Liabilities Common Stock Retained Earnings Total Liabilities and Stockholder's Equity $ $ $ $ 900,000 900,000 1,100,000 2,900,000 850,000 900,000 1,594,500 3,344,500 Requirement d: 800,000 100,000 80,000 100,000 20,000 20,000 520,000 USE THIS TEXTBLOCK TO PROVIDE YOUR EXAMPLE AND EXPLANATION (c) $ Difference Between Actual/Expected