Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Assume the average cost of computer equipment fell 21.6 percent between 2012 and 2013. Let's see whether these changes are reflected in the income statement

image text in transcribed
image text in transcribed
image text in transcribed
image text in transcribed
Assume the average cost of computer equipment fell 21.6 percent between 2012 and 2013. Let's see whether these changes are reflected in the income statement of Computer Tycoon Inc. for the year ended December 31, 2013. Sales Revenues Cost of Goods Sold 2013 $100,700 61,800 2012 $125,065 75,039 3 Gross Profit Selling. General, and Administrative Expenses Interest Expense 38,900 30,300 587 50,026 30,300 5 450 Income before Income Tax Expense Income Tax Expense 8,013 4,802 19,276 6,220 Net Income $ 3,211 $ 13,056 1-a. Conduct a horizontal analysis by calculating the year-over-year changes in each line item, expressed in dollars and in percentages. (Round your "Percentage" to 1 decimal place. Any decrease in amounts should be indicated with minus sign) COMPUTER TYCOON, INC. Vertical Analysis of Income Statements For the Years Ended December 31 2012 Change in Dollars Percentage $ % % Sales revenues Costs of goods sold Gross profit Selling, general, and Administrative expenses Interest expense Income before income tax expenso Income tax expense Not income 2013 100.700$ 61,800 38,900 30,300 587 8,013 4,802 3,211 $ % 125,065 75,039 50,026 30,300 450 19,276 6,220 13,056 % % S % % % 2-a. Conduct a vertical analysis by expressing each line as a percentage of total revenues. (Round your answers to 1 decimal place. Input all amounts as positive values.) $ % COMPUTER TYCOON, INC. Vertical Analysis of Income Statements For the Years Ended December 31 2013 Sales revenues $ 100,700 % Costs of goods sold 61,800 % Gross profit 38,900 96 Selling, general, and Administrative expenses 30,300 % Interest expense 587 % Income before income tax expense 8,013 % Income tax expense 4,802 % Net income $ 3,211 % % 2012 125,065 75,039 50,026 30,300 450 19,276 6,220 13,056 % % % 96 96 $ % 2-b. Excluding income tax, Interest, and selling, general, and administrative expenses, did Computer Tycoon earn more profit per dollar of sales in 2013 compared to 2012? No O Yes

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Fraud Examination And Prevention

Authors: W. Steve Albrecht, Chad O. Albrecht

1st Edition

053872689X, 978-0538726894

More Books

Students also viewed these Accounting questions