Revenue and expense data for the current calendar year for Garrity Electronics Company and for the electronics industry are as follows. The Garrity Electronics Company data are expressed in dollars. The electronics industry averages are expressed in percentages.

a. Prepare a common-sized income statement comparing the results of operations for Garrity Electronics Company with the industry average.
b. As far as the data permit, comment on significant relationships revealed by thecomparisons.

Transcribed Image Text:

Garrity Sales Sales returns and allowances Net sales Cost of goods sold Gross profit Selling expenses Administrative expenses Total operating expenses Operating income Other income Electronics Company $4,728,800 128,800 4,600,000 2,668,000 $1,932,000 $1,472,000 368,000 $1,840,000 92,000 138,000 230,000 Electronics Industry Average 102.5% 2.5 100.0% 61.0 39.0% 23.0% 10.0 33.0% 60% 3.0 90% 1.0 8.0% 2.5 5.5% Other expense Income before income tax Income tax expense Net income 46,000 184,000 115,000 69,000