You are auditing payroll for the Sinker Technologies company for the year ended October 31, 2016....

  

Transcribed Image Text:

You are auditing payroll for the Sinker Technologies company for the year ended October 31, 2016. Included next are amounts from the client's trial balance, along with comparative audited information for the prior year. E (Click the icon to view the amounts from the trial balance.) A (Click the icon to view the additional information.) Requirements a. Use the final balances for the prior year and the information in items 1 through 5 to develop an expected value for each account, except sales. (Round to the nearest whole dollar.) b. Calculate the difference between your expectation and the client's recorded amount as a percentage using the formula (expected value-recorded amountyexpected value. (Round to the nearest hundredth percent, X.XX%.) Requirement a. (1) (2) Preliminary Balance Expected Value 10/31/2016 10/31/2016 Executive salaries 576,886 Factory hourly payroll 11,697,055 Factory supervisors' salaries 760,800 Office salaries 2,404,933 Sales commissions 2,660,499 Data Table Audited Balance Preliminary Balance 10/31/2015 10/31/2016 Sales $ 56,038,100 $ 65,564,577 Executive salaries 551,291 576,886 Factory hourly payroll 10,402,954 11,697,055 Factory supervisors' salaries 659,285 760,800 Office salaries 2,239,582 2,404,933 Sales commissions 2,633,999 2,660,499 Print Done i More Info You have obtained the following information to help you perform preliminary analytical procedures for the payroll account balances. 1. There has been a significant increase in the demand for Sinker's products. The increase in sales was due to both an increase in the average selling price of four percent and an increase in units sold that resulted from the increased demand and an increased marketing effort. 2. Even though sales volume increased there was no addition of executives, factory supervisors, or office personnel. 3. All employees including executives, but excluding commission salespeople, received a six percent salary increase starting November 1, 2015. Commission salespeople receive their increased compensation through the increase in sales. 4. The increased number of factory hourly employees was accomplished by recalling employees that had been laid off. They receive the same wage rate as existing employees. Sinker does not permit overtime. 5. Commission salespeople receive a ten percent commission on all sales on which a commission is given. Approximately 75 percent of sales earn sales commission. The other 25 percent are "call-ins," for which no commission is given. Commissions are paid in the month following the month they are earned. Print Done You are auditing payroll for the Sinker Technologies company for the year ended October 31, 2016. Included next are amounts from the client's trial balance, along with comparative audited information for the prior year. E (Click the icon to view the amounts from the trial balance.) A (Click the icon to view the additional information.) Requirements a. Use the final balances for the prior year and the information in items 1 through 5 to develop an expected value for each account, except sales. (Round to the nearest whole dollar.) b. Calculate the difference between your expectation and the client's recorded amount as a percentage using the formula (expected value-recorded amountyexpected value. (Round to the nearest hundredth percent, X.XX%.) Requirement a. (1) (2) Preliminary Balance Expected Value 10/31/2016 10/31/2016 Executive salaries 576,886 Factory hourly payroll 11,697,055 Factory supervisors' salaries 760,800 Office salaries 2,404,933 Sales commissions 2,660,499 Data Table Audited Balance Preliminary Balance 10/31/2015 10/31/2016 Sales $ 56,038,100 $ 65,564,577 Executive salaries 551,291 576,886 Factory hourly payroll 10,402,954 11,697,055 Factory supervisors' salaries 659,285 760,800 Office salaries 2,239,582 2,404,933 Sales commissions 2,633,999 2,660,499 Print Done i More Info You have obtained the following information to help you perform preliminary analytical procedures for the payroll account balances. 1. There has been a significant increase in the demand for Sinker's products. The increase in sales was due to both an increase in the average selling price of four percent and an increase in units sold that resulted from the increased demand and an increased marketing effort. 2. Even though sales volume increased there was no addition of executives, factory supervisors, or office personnel. 3. All employees including executives, but excluding commission salespeople, received a six percent salary increase starting November 1, 2015. Commission salespeople receive their increased compensation through the increase in sales. 4. The increased number of factory hourly employees was accomplished by recalling employees that had been laid off. They receive the same wage rate as existing employees. Sinker does not permit overtime. 5. Commission salespeople receive a ten percent commission on all sales on which a commission is given. Approximately 75 percent of sales earn sales commission. The other 25 percent are "call-ins," for which no commission is given. Commissions are paid in the month following the month they are earned. Print Done