Question
Income statement data for Winthrop Company for two recent years ended December 31 are as follows: Question not attempted. 1 Current Year Previous Year 2
Income statement data for Winthrop Company for two recent years ended December 31 are as follows:
Question not attempted.
1 |
| Current Year | Previous Year |
2 | Sales | $1,836,800.00 | $1,640,000.00 |
3 | Cost of goods sold | 1,556,442.00 | 1,402,200.00 |
4 | Gross profit | $280,358.00 | $237,800.00 |
5 | Selling expenses | $79,800.00 | $70,000.00 |
6 | Administrative expenses | 48,840.00 | 44,000.00 |
7 | Total operating expenses | $128,640.00 | $114,000.00 |
8 | Income before income tax | $151,718.00 | $123,800.00 |
9 | Income tax expense | 12,300.00 | 8,200.00 |
10 | Net income | $139,418.00 | $115,600.00 |
A. | Prepare a comparative income statement with horizontal analysis, indicating the increase (decrease) for the current year when compared with the previous year. Round percentages to one decimal place. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
B. | What conclusions can be drawn from the horizontal analysis? Round the answers to one decimal place.
Prepare a comparative income statement with horizontal analysis, indicating the increase (decrease) for the current year when compared with the previous year. Round percentages to one decimal place.
Solution
|
What conclusions can be drawn from the horizontal analysis? Round the answers to one decimal place.
The net income for Winthrop Company increased by approximately ____% this year. This increase was the combined result of an increase in sales of ____% and lower percentage increase in cost of goods sold.
The cost of goods sold increased at a slower rate than the increase in sales, thus causing the percentage increase in gross profit to be greater than the percentage increase in sales.
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