Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Assume the average cost of computer equipment fell 23.9 percent between 2016 and 2017. Let's see whether these changes are reflected in the income statement
Assume the average cost of computer equipment fell 23.9 percent between 2016 and 2017. Let's see whether these changes are reflected in the income statement of Computer Tycoon Inc. for the year ended December 31, 2017. Sales Revenues Cost of Goods Sold 2017 $101, 100 61,900 2016 $128,704 77,222 39,200 30,400 589 51,482 30,400 486 Gross Profit Selling, General, and Administrative Expenses Interest Expense Income Before Income Tax Expense Income Tax Expense 8,211 4,989 20,596 6,857 Net Income $ 3,222 $ 13,739 Required: 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. Horizontal Analysis of Income Statements For the Years Ended December 31 Change in Dollars Percentage 2017 2016 $ $ % 128,704 77,222 % Sales revenues Costs of goods sold Gross profit Selling, General, and Administrative expenses Interest expense Income before income tax expense Income tax expense 101,100 61,900 39,200 30,400 589 % 51,482 30,400 486 % % 8,211 % 20,596 6,857 13,739 4,989 3,222 % Net income $ $ % 1-b. Not available in Connect. 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.) 2016 % COMPUTER TYCOON, INC. Vertical Analysis of Income Statements For the Years Ended December 31 2017 Sales revenues $ 101,100 Costs of goods sold 61,900 Gross profit 39,200 Selling, General, and Administrative expenses 30,400 Interest expense 589 Income before income tax expense 8,211 Income tax expense 4,989 Net income $ 3,222 % % % % $ 128,704 77.222 51,482 30,400 486 20,596 6,857 $ 13,739 % % % % % % 2-b. Excluding income tax, interest, and selling, general, and administrative expenses, did Computer Tycoon earn more profit per dollar of sales in 2017 compared to 2016? Yes No
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started