Sports Emporium has two operating segments: sporting goods and sports apparel. The income statement for each operating segment is presented below.

Required:

1. Complete the “%” columns to be used in a vertical analysis of Sports Emporium’s two operating segments. Express each amount as a percentage of sales.

2. Use vertical analysis to compare the profitability of the two operating segments. Which segment is more profitable?

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SPORTS EMPORIUM Income Statement For the year ended December 31, 2021 Sporting Goods Sports Apparel Amount % Amount Net sales $1,800,000 $970,000 Cost of goods sold 1,040,000 440,000 Gross profit Operating expenses Operating income Other income (expense) 760,000 530,000 450,000 340,000 310,000 190,000 (15,000) 175,000 20,000 Income before tax 330,000 Income tax expense 70,000 $105,000 80,000 Net income $ 250,000