Revenue and expense data for Innovation Quarter Inc. for two recent years are as follows: Line Item
Question:
Revenue and expense data for Innovation Quarter Inc. for two recent years are as follows:
Line Item Description | Current Year | Previous Year |
---|---|---|
Sales | $4,000,000 | $3,600,000 |
Cost of goods sold | 2,280,000 | 1,872,000 |
Selling expenses | 600,000 | 648,000 |
Administrative expenses | 520,000 | 360,000 |
Income tax expense | 240,000 | 216,000 |
Question Content Area
make a income statement in comparative form, stating each item for both years as a percent of sales. Round your answers to the nearest whole percentage.
Line Item Description | Current year Amount | Current year Percent | Previous year Amount | Previous year Percent |
---|---|---|---|---|
Sales | $4,000,000 | Sales% | $3,600,000 | Sales% |
Cost of goods sold | (2,280,000) | Cost of goods sold% | (1,872,000) | Cost of goods sold% |
Gross profitOperating incomeNet incomeTotal operating expenses | $- Select - | - Select -% | $- Select - | - Select -% |
Selling expenses | $(600,000) | Selling expenses% | $(648,000) | Selling expenses% |
Administrative expenses | (520,000) | Administrative expenses% | (360,000) | Administrative expenses% |
Gross profitOperating incomeNet incomeTotal operating expenses | $- Select - | - Select -% | $- Select - | - Select -% |
Gross profitOperating incomeNet incomeTotal operating expenses | $- Select - | - Select -% | $- Select - | - Select -% |
Income tax expense | (240,000) | Income tax expense% | (216,000) | Income tax expense% |
Gross profitOperating incomeNet incomeTotal operating expenses | $- Select - | - Select -% | $- Select - | - Select -% |
Question Content Area
b. The vertical analysis indicates that the cost of goods sold as a percent of sales fill in the blank 1 of 4
increaseddecreased
by 5 percentage points, while selling expenses fill in the blank 2 of 4
increaseddecreased
by 3 percentage points, and administrative expenses fill in the blank 3 of 4
increaseddecreased
by 3 percentage points. Thus, net income as a percent of sales fill in the blank 4 of 4
increaseddecreased
by 5 percentage points.
Accounting
ISBN: 9781337902687
28th Edition
Authors: Carl S. Warren, Christine Jonick, Jennifer Schneider