Question
Vertical Analysis of Income Statement Revenue and expense data for Innovation Quarter Inc. for two recent years are as follows: Current Year Previous Year Sales
Vertical Analysis of Income Statement
Revenue and expense data for Innovation Quarter Inc. for two recent years are as follows:
Current Year | Previous Year | |||
Sales | $506,000 | $425,000 | ||
Cost of goods sold | 293,480 | 221,000 | ||
Selling expenses | 86,020 | 80,750 | ||
Administrative expenses | 91,080 | 72,250 | ||
Income tax expense | 15,180 | 21,250 |
a. Prepare an income statement in comparative form, stating each item for both years as a percent of sales. If required, round percentages to one decimal place. Enter all amounts as positive numbers.
b. The vertical analysis indicates that the cost of goods sold as a percent of sales (increased, decreased) by 6 percentage points, while selling expenses (increased, decreased)
by 2 percentage points, and administrative expenses (increased, decreased) by 1 percentage points. Thus, net income as a percent of sales (increased, decreased) by 3 percentage points.
Innovation Quarter Inc. Comparative Income Statement For the Years Ended December 31 Current year Amount Current year Percent Previous year Amount Previous year Percent $506,000 % $425,000 % 293,480 % 221,000 % Sales Cost of goods sold % % Selling expenses 86,020 % 80,750 % Administrative expenses 91,080 % 72,250 % % $ % % % Income tax expense 15,180 % 21,250 % % %Step by Step Solution
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