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In: Accounting
Preparing Common-Size Income Statements by Using Base Period Horizontal Analysis Scherer Company provided the following income...
Preparing Common-Size Income Statements by Using Base Period Horizontal Analysis
Scherer Company provided the following income statements for its first 3 years of operation:
| Scherer Company Income Statements Years of Operation |
|||
| Year 1 | Year 2 | Year 3 | |
| Net sales | $1,010,000 | $1,131,200 | $1,353,400 |
| Less: Cost of goods sold | (293,000) | (314,000) | (362,000) |
| Gross margin | $717,000 | $817,200 | $991,400 |
| Less: | |||
| Operating expenses | (424,000) | (490,000) | (595,500) |
| Income taxes | (110,800) | (120,200) | (135,000) |
| Net income | $182,200 | $207,000 | $260,900 |
repare common-size income statements by using Year 1 as the base period. (Note: Enter all amounts as positive numbers, except for a net loss. Enter net loss as a negative number, if applicable. Round answers to the nearest whole percentage.)
| Scherer Company | ||||||
| Common-Size Income Statements | ||||||
| Years of Operation | ||||||
| Year 1 | Year 1 | Year 2 | Year 2 | Year 3 | Year 3 | |
| Dollars | Percentage | Dollars | Percentage | Dollars | Percentage | |
| Net sales | $1,010,000 | % | 1,131,200 | % | $1,353,400 | % |
| Less: Cost of goods sold | (293,000) | (314,000) | (362,000) | |||
| Gross margin | $717,000 | $817,200 | $991,400 | |||
| Less: | ||||||
| Operating expenses | (424,000) | (490,000) | (595,500) | |||
| Income taxes | (110,800) | (120,200) | (135,000) | |||
| Net income | $182,200 | $207,000 | $260,900 | |||
Solutions
Expert Solution
| Ans. | SCHERER COMPANY | |||||||
| Common Size Income Statements | ||||||||
| Years of Operation | ||||||||
| Year 1 | Year 1 | Year 2 | Year 2 | Year 3 | Year 3 | |||
| Dollars | Percentage | Dollars | Percentage | Dollars | Percentage | |||
| Net sales | $1,010,000 | 100.00% | $1,131,200 | 100.00% | $1,353,400 | 100.00% | ||
| Cost of goods sold | -$293,000 | -29.01% | -$314,000 | -27.76% | -$362,000 | -26.75% | ||
| Gross profit | $717,000 | 70.99% | $817,200 | 72.24% | $991,400 | 73.25% | ||
| Less: | ||||||||
| Operating expenses | -$424,000 | -41.98% | -$490,000 | -43.32% | -$595,500 | -44.00% | ||
| Income taxes | -$110,800 | -10.97% | -$120,200 | -10.63% | -$135,000 | -9.97% | ||
| Net income | $182,200 | 18.04% | $207,000 | 18.30% | $260,900 | 19.28% | ||
| *In a common size income statement, all precentages are calculated on the base of sales. | ||||||||
| Amount is percentage for year 1 = Particular amount of year 1 / Sales * 100 | ||||||||
| Amount is percentage for year 2 = Particular amount of year 2 / Sales * 100 | ||||||||
| Amount is percentage for year 3 = Particular amount of year 3 / Sales * 100 | ||||||||
ekkarill92 answered 1 year agoRelated Solutions
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