Question
Year 2 Year 1 Sales $ 529,000 $ 420,000 Cost of goods sold 330,000 268,000 Gross profit $ 199,000 $ 152,000 Operating expenses 130,000 116,000
Year 2 | Year 1 | ||||||
Sales | $ | 529,000 | $ | 420,000 | |||
Cost of goods sold | 330,000 | 268,000 | |||||
Gross profit | $ | 199,000 | $ | 152,000 | |||
Operating expenses | 130,000 | 116,000 | |||||
Net income | $ | 69,000 | $ | 36,000 |
a. Prepare common size income statements for Price Company, a sole proprietorship, for the two years shown as above by converting the dollar amounts into percentages. For each year, sales will appear as 100 percent and other items will be expressed as a percentage of sales. (Income taxes are not involved as the business is not incorporated.)
b. State whether the changes from year 1 to year 2 are favorable or unfavorable.
Complete this question by entering your answers in the tabs below.
Required A
Prepare common size income statements for Price Company, a sole proprietorship, for the two years shown as above by converting the dollar amounts into percentages. For each year, sales will appear as 100 percent and other items will be expressed as a percentage of sales. (Income taxes are not involved as the business is not incorporated.) (Round your percentage value answers to 2 decimal places. i.e. 0.1234 as 12.34%.)
|
- Required B
State whether the changes from year 1 to year 2 are favorable or unfavorable.
Sales | Favorable or unfavorable |
Gross Profit | Favorable or unfavorable |
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored 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