What is the calculation for this question? Due to intense negotiation Hercules was able to reduce the cost of goods sold to 65% of net sales.

Your sister operates Hercules Parts Company, a mal order boet parts distributorship that is in its third year of Operations. The following is the single eo income statement for the year ended December 31, 2016 Proposed Multiple Step Income Statement Year Ended December 30, 2017 Hercules Parts Company Income Statement Revenues: Net Sales revenue Cost of Gross profit Year Ended December 31, 2016 Revenues $600,000 ds sold Expenses: 420,000 38,850 20,000.00o $7,000.00 31,200 2,800.00 Coat of goods sold Freight out expense (shipping charges Advertising Expense Office salaries expense Office supplies expenee Interest Expense Total Expenses 29,850 $70,150 Your sister had the following inventory balances: 1/01/16 12/31/16 Projected inventory as of 12/31/1 $38,00o.00 18,000.00 Your sister is considering a propoal to increase net income by offering thelr sales representatives a salary commission on every unit they sell. This should help Increase sales. They also will be able to bargain for a better purchase price for their inventory, control their inventory more efficiently by adopting just-n-time Inventory and by shipping al l merchandise FOB Shippling Point. Presently, all merchandise s shipped FOB Destination. (Assume that the interest expense will remain the same in 2017). Net income is estimated that more creative marketing (in 2017) will enable Hercules to have 20% ncrease in the Net Sales they had in 2016 by attracting new customers Assume the new shipping terms (in 2017) will cause Hercules to have 15% decrease in the Net Sales they had in 2016 Due to intense negotiations Hercules was able to reduce the cost of goods sold to 65% cf Net Sales Assame thet Sales Salaries Expense, Advertising Expense, Office Selaries Expense and Office Suppies Expense will all increase by 10%. Hercules Parts Company Vertical Analysis For the years ended December 31, 2017 and 2016 that all ssles representatives will now receive 5% comission on every sales dollar This will create a new expense that we will call Seles Commission Expense 2017 Pecent 2016 Pecent Net Sales Revenue Cost of Goods Sold Gross Profit Sales Salaries Expense Freight Out Expense Advertising Expense Sales Comm. Expense Office Salaries Expense Office Supplies Expense Interest Expense Net Income 00% 100% Required: 1. Prepare a projected multiple step income statement for the year ended December 31,2017.Submit using the Project 2 Working Papers Excel fle: Tab parts 1-2 Use the Merchandise Operations vertical analysis video in Module 6 as a gulde to prepare the multiple step income statement. 2. Prepare the vertical analysis of the income statement for the two years ended December 31, 2017 and December 31, 2016. Use the Merchandise Operations vertical analysis video in Module 6 as a guide to prepare the analysis.Submit using the Project 2 Working Paper Excel file: Tab Parts 1-2 3. From the projections does it appear that Hercules will do a better job controlling their inventory? Why or Wery Not? Indlude your computation of the inventory turnove or 2017 and 2016 to support the rationale for your answer.Subenit using the Project 2 Working Paper Excel file: Tab Parts 3-4 4 Based on your projected income statement and vertical analysis would you recommend the proposed changes? Why or why not? Submit using Tab Parts 3-4 of the Project 2 Working Paper Excel file