Revenue and expense data for Innovation Quarter Inc. for two recent years are as follows:
Current Year Previous Year Sales $381,000 $328,000 Cost of goods sold 220,980 173,840 Selling expenses 64,770 62,320 Administrative expenses 68,580 55,760 Income tax expense 11,430 13,120
a. Prepare an income statement in comparative form, stating each item for both years as a percent of sales. If required, round percentages to one decimal place. Enter all amounts as positive numbers.
Innovation Quarter Inc. Comparative Income Statement For the Years Ended December 31 Current year Amount Current year Percent Previous year Amount Previous year Percent Sales $381,000 % $328,000 % Cost of goods sold 220,980 % 173,840 % $ % $ % Selling expenses 64,770 % 62,320 % Administrative expenses 68,580 % 55,760 % $ % $ % % % Income tax expense 11,430 % 13,120 % $ % $ %
b. The vertical analysis indicates that the cost of goods sold as a percent of sales by 5 percentage points, while selling expenses by 2 percentage points, and administrative expenses by 1 percentage points. Thus, net income as a percent of sales by 3 percentage points.
Revenue and expense data for Innovation Quarter Inc. for two recent years are as follows:
| Current Year | Previous Year | |||
| Sales | $381,000 | $328,000 | ||
| Cost of goods sold | 220,980 | 173,840 | ||
| Selling expenses | 64,770 | 62,320 | ||
| Administrative expenses | 68,580 | 55,760 | ||
| Income tax expense | 11,430 | 13,120 | ||
a. Prepare an income statement in comparative form, stating each item for both years as a percent of sales. If required, round percentages to one decimal place. Enter all amounts as positive numbers.
| Innovation Quarter Inc. | ||||
| Comparative Income Statement | ||||
| For the Years Ended December 31 | ||||
| Current year Amount | Current year Percent | Previous year Amount | Previous year Percent | |
| Sales | $381,000 | % | $328,000 | % |
| Cost of goods sold | 220,980 | % | 173,840 | % |
| $ | % | $ | % | |
| Selling expenses | 64,770 | % | 62,320 | % |
| Administrative expenses | 68,580 | % | 55,760 | % |
| $ | % | $ | % | |
| % | % | |||
| Income tax expense | 11,430 | % | 13,120 | % |
| $ | % | $ | % | |
b. The vertical analysis indicates that the cost of goods sold as a percent of sales by 5 percentage points, while selling expenses by 2 percentage points, and administrative expenses by 1 percentage points. Thus, net income as a percent of sales by 3 percentage points.
Related questions
Instructions
Income statement data for Moreno Company for two recent yearsended December 31, are as follows:
Moreno Company |
Comparative Income Statement |
For the Years Ended December 31, 20-- |
1 | Current Year | Previous Year | |
2 | Sales | $1,948,800.00 | $1,740,000.00 |
3 | Cost of goods sold | 1,674,750.00 | 1,522,500.00 |
4 | Gross profit | $274,050.00 | $217,500.00 |
5 | Selling expenses | $71,875.00 | $62,500.00 |
6 | Administrative expenses | 51,520.00 | 46,000.00 |
7 | Total operating expenses | $123,395.00 | $108,500.00 |
8 | Income before income tax | $150,655.00 | $109,000.00 |
9 | Income tax expense | 13,398.00 | 8,700.00 |
10 | Net income | $137,257.00 | $100,300.00 |
| Required: | |
| A. | Prepare a comparative incomestatement with horizontal analysis for the two-year period,indicating the increase (decrease) for the current year whencompared with the previous year. Use the minus sign to indicate anamount or percent decrease. If required, round percentages to onedecimal place. |
| B. | What conclusions can be drawnfrom the horizontal analysis? |
X
Income Statement
Prepare a comparative income statement with horizontal analysisfor the two-year period, indicating the increase (decrease) for thecurrent year when compared with the previous year. Use the minussign to indicate an amount or percent decrease. If required, roundpercentages to one decimal place.
Moreno Company |
Comparative Income Statement |
For the Years Ended December 31, 20-- |
1 | Increase (Decrease) | Increase (Decrease) | |||
2 | Current Year | Previous Year | Amount | Percent | |
3 | Sales | $1,948,800.00 | $1,740,000.00 | ||
4 | Cost of goods sold | 1,674,750.00 | 1,522,500.00 | ||
5 | Gross profit | $274,050.00 | $217,500.00 | ||
6 | Selling expenses | $71,875.00 | $62,500.00 | ||
7 | Administrative expenses | 51,520.00 | 46,000.00 | ||
8 | Total operating expenses | $123,395.00 | $108,500.00 | ||
9 | Income before income tax | $150,655.00 | $109,000.00 | ||
10 | Income tax expense | 13,398.00 | 8,700.00 | ||
11 | Net income | $137,257.00 | $100,300.00 |
Income statement data for Moreno Company for two recent yearsended December 31, are as follows:
Moreno Company |
Comparative Income Statement |
For the Years Ended December 31, 20-- |
1 | Current Year | Previous Year | |
2 | Sales | $1,120,000.00 | $1,000,000.00 |
3 | Cost of goods sold | 971,250.00 | 875,000.00 |
4 | Gross profit | $148,750.00 | $125,000.00 |
5 | Selling expenses | $71,250.00 | $62,500.00 |
6 | Administrative expenses | 56,000.00 | 50,000.00 |
7 | Total operating expenses | $127,250.00 | $112,500.00 |
8 | Income before income tax | $21,500.00 | $12,500.00 |
9 | Income tax expense | 8,000.00 | 5,000.00 |
10 | Net income | $13,500.00 | $7,500.00 |
| Required: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| A. | Prepare a comparative incomestatement with horizontal analysis for the two-year period,indicating the increase (decrease) for the current year whencompared with the previous year. Use the minus sign to indicate anamount or percent decrease. If required, round percentages to onedecimal place. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| B. | What conclusions can be drawn from the horizontalanalysis? Prepare a comparative income statement with horizontal analysisfor the two-year period, indicating the increase (decrease) for thecurrent year when compared with the previous year. Use the minussign to indicate an amount or percent decrease. If required, roundpercentages to one decimal place.
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