Question

Common-Size Income Statements
Consider the following income statement data from the Ross Company:

	2013	2012
Sales revenue	$529,000	$454,000
Cost of goods sold	336,000	279,000
Selling expenses	105,000	99,000
Administrative expenses	64,000	58,000
Income tax expense	11,800	9,400

Prepare common-size income statements for each year.

Note: Round answers to one decimal place (ex: 0.2345 = 23.5%).

ROSS COMPANY Common-Size Income Statements (Percent of Sales Revenue)
	2013	2012
Sales Revenue	Answer	Answer
Cost of Goods Sold	Answer	Answer
AnswerGross Profit on SalesOperating ExpensesIncome Tax ExpenseNet Income	Answer	Answer
AnswerGross Profit on SalesOperating ExpensesIncome Tax ExpenseNet Income
Selling Expenses	Answer	Answer
Administrative Expenses	Answer	Answer
Total	Answer	Answer
Income before Income Taxes	Answer	Answer
AnswerGross Profit on SalesOperating ExpensesIncome Tax ExpenseNet Income	Answer	Answer
AnswerGross Profit on SalesOperating ExpensesIncome Tax ExpenseNet Income	Answer	Answer

Answer 1

ROSS COMPANY
Common-Size Income Statements
(Percent of Sales Revenue)
	2013	2012
Sales Revenue	100.0%	100.0%
Cost of goods sold	63.5%	61.5%
Gross Profit on Sales	36.5%	38.5%
Operating Expenses
Selling Expenses	19.8%	21.8%
Administrative Expenses	12.1%	12.8%
Total	31.9%	34.6%
Income before Income Taxes	4.5%	4.0%
Income Tax Expense	2.2%	2.1%
Net Income	2.3%	1.9%

Workings:
	2013	Percent	2012	Percent
Sales Revenue	529000	100.0%	454000	100.0%
Cost of goods sold	336000	63.5%	279000	61.5%
Gross Profit on Sales	193000	36.5%	175000	38.5%
Operating Expenses
Selling Expenses	105000	19.8%	99000	21.8%
Administrative Expenses	64000	12.1%	58000	12.8%
Total	169000	31.9%	157000	34.6%
Income before Income Taxes	24000	4.5%	18000	4.0%
Income Tax Expense	11800	2.2%	9400	2.1%
Net Income	12200	2.3%	8600	1.9%