Question
Preparing Common-Size Income Statements by Using Base Period Horizontal Analysis Scherer Company provided the following income statements for its first 3 years of operation: Scherer
Preparing Common-Size Income Statements by Using Base Period Horizontal Analysis
Scherer Company provided the following income statements for its first 3 years of operation:
| Scherer Company Income Statements Years of Operation | |||
| Year 1 | Year 2 | Year 3 | |
| Net sales | $1,000,000.00 | $1,100,000.00 | $1,300,000.00 |
| Less: Cost of goods sold | (300,000.00) | (310,000.00) | (364,000.00) |
| Gross margin | $700,000.00 | $790,000.00 | $936,000.00 |
| Less: | |||
| Operating expenses | (421,000.00) | (484,000.00) | (591,000.00) |
| Income taxes | (111,600.00) | (122,400.00) | (137,800.00) |
| Net income | $167,400.00 | $183,600.00 | $206,200.00 |
Required:
Prepare common-size income statements by using Year 1 as the base period. (Note: Enter all amounts as positive numbers, except for a net loss. Enter net loss as a negative number, if applicable. Round answers to the nearest whole percentage.)
| Scherer Company | ||||||
| Common-Size Income Statements | ||||||
| Years of Operation | ||||||
| Year 1 | Year 1 | Year 2 | Year 2 | Year 3 | Year 3 | |
| Dollars | Percentage | Dollars | Percentage | Dollars | Percentage | |
| Net sales | $1,000,000 | fill in the blank 1% | 1,100,000 | fill in the blank 2% | $1,300,000 | fill in the blank 3% |
| Less: Cost of goods sold | (300,000) | fill in the blank 4 | (310,000) | fill in the blank 5 | (364,000) | fill in the blank 6 |
| Gross margin | $700,000 | fill in the blank 7 | $790,000 | fill in the blank 8 | $936,000 | fill in the blank 9 |
| Less: | ||||||
| Operating expenses | (421,000) | fill in the blank 10 | (484,000) | fill in the blank 11 | (591,000) | fill in the blank 12 |
| Income taxes | (111,600) | fill in the blank 13 | (122,400) | fill in the blank 14 | (137,800) | fill in the blank 15 |
| Net income | $167,400 | fill in the blank 16 | $183,600 | fill in the blank 17 | $206,200 | fill in the blank 18 |
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access with AI-Powered 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
Managerial Accounting The Cornerstone of Business Decision Making
Authors: Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
7th edition
978-1337116008, 1337116009, 1337115770, 978-1337516150, 1337516155, 978-1337115773
