Refer to Camellia Company’s income statements for the last three years as shown in Exercise 16-26.

Required:

1. Prepare a common-size income statement for year 1 by expressing each line item as a percentage of sales revenue.

2. Prepare a common-size income statement for year 2 by expressing each line item as a percentage of sales revenue.

3. Prepare a common-size income statement for year 3 by expressing each line item as a percentage of sales revenue.

Exercise 16-26.

Transcribed Image Text:

Camellia Company Income Statements For the Years 1, 2, and 3 Year 2 Year 1 Year 3 $ 1,700,000 (1,000,000) $ 700,000 $1,000,000 (700,000) $ 300,000 Sales $1,200,000 Less: Cost of goods sold Gross margin Less operating expenses: Selling expenses Administrative expenses Net operating income Less: Interest expense Income before taxes (700,000) $ 500,000 (150,000) (50,000) $ 100,000 (25,000) 2$ (220,000) (60,000) $ 220,000 (25,000) $ 195,000 (250,000) (120,000) $ 330,000 (25,000) $ 305,000 75,000