Question
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 | $1,100,000 | $1,300,000 |
| Less: Cost of goods sold | (300,000) | (315,000) | (369,000) |
| Gross margin | $700,000 | $785,000 | $931,000 |
| Less: | |||
| Operating expenses | (431,000) | (488,000) | (600,500) |
| Income taxes | (111,000) | (123,000) | (135,800) |
| Net income | $158,000 | $174,000 | $194,700 |
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 | (315,000) | fill in the blank 5 | (369,000) | fill in the blank 6 |
| Gross margin | $700,000 | fill in the blank 7 | $785,000 | fill in the blank 8 | $931,000 | fill in the blank 9 |
| Less: | ||||||
| Operating expenses | (431,000) | fill in the blank 10 | (488,000) | fill in the blank 11 | (600,500) | fill in the blank 12 |
| Income taxes | (111,000) | fill in the blank 13 | (123,000) | fill in the blank 14 | (135,800) | fill in the blank 15 |
| Net income | $158,000 | fill in the blank 16% | $174,000 | fill in the blank 17% | $194,700 | fill in the blank 18% |
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South Western Federal Taxation 2017 Essentials Of Taxation Individuals And Business Entities
Authors: William A. Raabe, David M. Maloney, James C. Young, Annette Nellen
20th Edition
9780357109144
