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Preparing Income Statements by Using Net Sales as the Base: Vertical Analysis Scherer Company provided the following income statements for its first 3 years of
Preparing Income Statements by Using Net Sales as the Base: Vertical 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 | $207,200.00 |
Required:
Prepare common-size income statements by using net sales as the base. (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. Percentages may not calculate down.)
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% | $207,200 | fill in the blank 18% |
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