Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Vertical analysis of income statement For 2012, Tri-Comic Company initiated a sales promotion campaign that included the expenditure of an additional $50,000 for advertising.

image text in transcribedimage text in transcribedimage text in transcribed

Vertical analysis of income statement For 2012, Tri-Comic Company initiated a sales promotion campaign that included the expenditure of an additional $50,000 for advertising. At the end of the year, Lumi Neer, the president, is presented with the following condensed comparative income statement: Tri-Comic Company Comparative Income Statement For the Years Ended December 31, 20Y2 and 20Y1 2012 20Y1 Sales $1,500,000 $1,250,000 Cost of goods sold (510,000) (475,000) Gross profit $990,000 $775,000 Selling expenses $(270,000) $(200,000) Administrative expenses (180,000) (156,250) Total operating expenses $(450,000) $(356,250) Operating income $540,000 $418,750 Other revenue 60,000 50,000 Income before income tax expense $600,000 $468,750 Income tax expense (450,000) (375,000) Net income $150,000 $93,750 1. Prepare a comparative income statement for the two-year period, presenting an analysis of each item in relationship to sales for each of the years. Round percentages to one decimal place. For those boxes in which you must enter subtracted or negative numbers use a minus sign. Tri-Comic Company Comparative Income Statement For the Yeare Ended December 31 30v2 and 201 BOOK 1. Prepare a comparative income statement for the two-year period, presenting an analysis of each item in relationship to sales for each of the years. Round percentages to one decimal place. For those boxes in which you must enter subtracted or negative numbers use a minus sign. Tri-Comic Company Comparative Income Statement For the Years Ended December 31, 20Y2 and 20Y1 2012 Amount Percent Line Item Description Sales Cost of goods sold Gross profit Selling expenses Administrative expenses Total operating expenses Operating income Other revenue Income before income tax expense $ Income tax expense Net income 2012 20Y1 20Y1 Amount Percent % $ % % % % % % $ % % % $ % % % $ % 2. To the extent the data permit, comment on the significant relationships revealed by the vertical analysis prepared in (1). Check My Work Previous Next Income tax expense Net income % 2. To the extent the data permit, comment on the significant relationships revealed by the vertical analysis prepared in (1). The vertical analysis indicates that the costs other than selling expenses (cost of goods sold and administrative expenses)) The sales promotion campaign appears to have been sales. As a result, net income as a percentage of sales) selling expenses as a percent of sales increased slightly, the increased cost was more than made up for by increased i as a percentage of While

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Accounting

Authors: Carl S. Warren, James M. Reeve, Jonathan E. Duchac

22nd Edition

324401841, 978-0-324-6250, 0-324-62509-X, 978-0324401844

More Books

Students also viewed these Accounting questions