Vertical Analysis of Income Statement
Revenue and expense data for Innovation Quarter Inc. for two recent years are as follows:
| Current Year | Previous Year | |||
| Sales | $511,000 | $439,000 | ||
| Cost of goods sold | 281,050 | 219,500 | ||
| Selling expenses | 91,980 | 87,800 | ||
| Administrative expenses | 97,090 | 79,020 | ||
| Income tax expense | 15,330 | 21,950 | ||
a. Prepare an income statement in comparative form, stating each item for both years as a percent of sales. If required, round percentages to one decimal place. Enter all amounts as positive numbers.
| Innovation Quarter Inc. | ||||
| Comparative Income Statement | ||||
| For the Years Ended December 31 | ||||
| Current year Amount | Current year Percent | Previous year Amount | Previous year Percent | |
| Sales | $511,000 | % | $439,000 | % |
| Cost of goods sold | 281,050 | % | 219,500 | % |
| $ | % | $ | % | |
| Selling expenses | 91,980 | % | 87,800 | % |
| Administrative expenses | 97,090 | % | 79,020 | % |
| $ | % | $ | % | |
| % | % | |||
| Income tax expense | 15,330 | % | 21,950 | % |
| $ | % | $ | % | |
b. The vertical analysis indicates that the cost of goods sold as a percent of sales by 5 percentage points, while selling expenses by 2 percentage points, and administrative expenses by 1 percentage points. Thus, net income as a percent of sales by 2 percentage points.
In: Accounting
Revenue and expense data for Innovation Quarter Inc. for two recent years are as follows:
| Current Year | Previous Year | |||
| Sales | $597,000 | $543,000 | ||
| Cost of goods sold | 370,140 | 304,080 | ||
| Selling expenses | 89,550 | 97,740 | ||
| Administrative expenses | 101,490 | 81,450 | ||
| Income tax expense | 11,940 | 21,720 | ||
a. Prepare an income statement in comparative form, stating each item for both years as a percent of sales. If required, round percentages to one decimal place. Enter all amounts as positive numbers.
| Innovation Quarter Inc. | ||||
| Comparative Income Statement | ||||
| For the Years Ended December 31 | ||||
| Current year Amount | Current year Percent | Previous year Amount | Previous year Percent | |
| Sales | $597,000 | % | $543,000 | % |
| Cost of goods sold | 370,140 | % | 304,080 | % |
| Gross profit | $ | % | $ | % |
| Selling expenses | 89,550 | % | 97,740 | % |
| Administrative expenses | 101,490 | % | 81,450 | % |
| Total operating expenses | $ | % | $ | % |
| Income from operations | % | % | ||
| Income tax expense | 11,940 | % | 21,720 | % |
| Net income | $ | % | $ | % |
b. The vertical analysis indicates that the cost of goods sold as a percent of sales by 6 percentage points, while selling expenses by 3 percentage points, and administrative expenses by 2 percentage points. Thus, net income as a percent of sales by 3 percentage points.
In: Accounting
Revenue and expense data for Innovation Quarter Inc. for two recent years are as follows:
| Current Year | Previous Year | |||
| Sales | $488,000 | $410,000 | ||
| Cost of goods sold | 287,920 | 217,300 | ||
| Selling expenses | 78,080 | 77,900 | ||
| Administrative expenses | 87,840 | 69,700 | ||
| Income tax expense | 14,640 | 16,400 | ||
a. Prepare an income statement in comparative form, stating each item for both years as a percent of sales. If required, round percentages to one decimal place. Enter all amounts as positive numbers.
| Innovation Quarter Inc. | ||||
| Comparative Income Statement | ||||
| For the Years Ended December 31 | ||||
| Current year Amount | Current year Percent | Previous year Amount | Previous year Percent | |
| Sales | $488,000 | % | $410,000 | % |
| Cost of goods sold | 287,920 | % | 217,300 | % |
| Gross profit | $ | % | $ | % |
| Selling expenses | 78,080 | % | 77,900 | % |
| Administrative expenses | 87,840 | % | 69,700 | % |
| Total operating expenses | $ | % | $ | % |
| Income from operations | % | % | ||
| Income tax expense | 14,640 | % | 16,400 | % |
| Net income | $ | % | $ | % |
b. The vertical analysis indicates that the cost of goods sold as a percent of sales by 6 percentage points, while selling expenses by 3 percentage points, and administrative expenses by 1 percentage points. Thus, net income as a percent of sales by 3 percentage points.
In: Accounting
Hair World Inc. is a wholesaler of hair supplies. Hair World uses a perpetual inventory system. The following transactions (summarized) have been selected for analysis:
| a. | Sold merchandise for cash (cost of merchandise $46,797). | $ | 87,200 | |
| b. | Received merchandise returned by customers as unsatisfactory (but in perfect condition) for cash refund (original cost of merchandise $630 ). | 1,050 | ||
| c. | Sold merchandise (costing $9,025 ) to a customer on account with terms n/60. | 19,000 | ||
| d. | Collected half of the balance owed by the customer in (c). | 9,500 | ||
| e. | Granted a partial allowance relating to credit sales the customer in (c) had not yet paid. | 304 | ||
Required:
a. Compute Net Sales and Gross Profit for Hair World
b. Compute the gross profit percentage. (Round your answer to 1 decimal place.)
c. Prepare journal entries to record transactions (a)–(e)
d. Hair World is considering a contract to sell merchandise to a hair salon chain for $24,000. This merchandise will cost Hair World $14,320. What would be the increase (or decrease) to Hair World’s gross profit and gross profit percentage? (Round "Gross Profit Percentage" to 1 decimal place.)
| Gross Profit | by | ________ | |
| Gross Profit Percentage | to | ________% |
In: Accounting
14 Vertical Analysis of Income Statement
Revenue and expense data for Innovation Quarter Inc. for two recent years are as follows:
| Current Year | Previous Year | |||
| Sales | $544,000 | $495,000 | ||
| Cost of goods sold | 293,760 | 242,550 | ||
| Selling expenses | 97,920 | 99,000 | ||
| Administrative expenses | 108,800 | 94,050 | ||
| Income tax expense | 16,320 | 24,750 | ||
a. Prepare an income statement in comparative form, stating each item for both years as a percent of sales. If required, round percentages to one decimal place. Enter all amounts as positive numbers.
| Innovation Quarter Inc. | ||||
| Comparative Income Statement | ||||
| For the Years Ended December 31 | ||||
| Current year Amount | Current year Percent | Previous year Amount | Previous year Percent | |
| Sales | $544,000 | % | $495,000 | % |
| Cost of goods sold | 293,760 | % | 242,550 | % |
| $ | % | $ | % | |
| Selling expenses | 97,920 | % | 99,000 | % |
| Administrative expenses | 108,800 | % | 94,050 | % |
| $ | % | $ | % | |
| % | % | |||
| Income tax expense | 16,320 | % | 24,750 | % |
| $ | % | $ | % | |
b. The vertical analysis indicates that the cost of goods sold as a percent of sales by 5 percentage points, while selling expenses by 2 percentage points, and administrative expenses by 1 percentage points. Thus, net income as a percent of sales by 2 percentage points.
In: Accounting
Vertical Analysis of Income Statement
Revenue and expense data for Innovation Quarter Inc. for two recent years are as follows:
| Current Year | Previous Year | |||
| Sales | $454,000 | $409,000 | ||
| Cost of goods sold | 267,860 | 216,770 | ||
| Selling expenses | 72,640 | 77,710 | ||
| Administrative expenses | 81,720 | 69,530 | ||
| Income tax expense | 13,620 | 16,360 | ||
a. Prepare an income statement in comparative form, stating each item for both years as a percent of sales. If required, round percentages to one decimal place. Enter all amounts as positive numbers.
| Innovation Quarter Inc. | ||||
| Comparative Income Statement | ||||
| For the Years Ended December 31 | ||||
| Current year Amount | Current year Percent | Previous year Amount | Previous year Percent | |
| Sales | $454,000 | % | $409,000 | % |
| Cost of goods sold | 267,860 | % | 216,770 | % |
| $ | % | $ | % | |
| Selling expenses | 72,640 | % | 77,710 | % |
| Administrative expenses | 81,720 | % | 69,530 | % |
| $ | % | $ | % | |
| % | % | |||
| Income tax expense | 13,620 | % | 16,360 | % |
| $ | % | $ | % | |
b. The vertical analysis indicates that the cost of goods sold as a percent of sales by 6 percentage points, while selling expenses by 3 percentage points, and administrative expenses by 1 percentage points. Thus, net income as a percent of sales by 3 percentage points.
In: Accounting
Vertical Analysis of Income Statement
Revenue and expense data for Innovation Quarter Inc. for two recent years are as follows:
| Current Year | Previous Year | |||
| Sales | $454,000 | $409,000 | ||
| Cost of goods sold | 267,860 | 216,770 | ||
| Selling expenses | 72,640 | 77,710 | ||
| Administrative expenses | 81,720 | 69,530 | ||
| Income tax expense | 13,620 | 16,360 | ||
a. Prepare an income statement in comparative form, stating each item for both years as a percent of sales. If required, round percentages to one decimal place. Enter all amounts as positive numbers.
| Innovation Quarter Inc. | ||||
| Comparative Income Statement | ||||
| For the Years Ended December 31 | ||||
| Current year Amount | Current year Percent | Previous year Amount | Previous year Percent | |
| Sales | $454,000 | % | $409,000 | % |
| Cost of goods sold | 267,860 | % | 216,770 | % |
| $ | % | $ | % | |
| Selling expenses | 72,640 | % | 77,710 | % |
| Administrative expenses | 81,720 | % | 69,530 | % |
| $ | % | $ | % | |
| % | % | |||
| Income tax expense | 13,620 | % | 16,360 | % |
| $ | % | $ | % | |
b. The vertical analysis indicates that the cost of goods sold as a percent of sales by 6 percentage points, while selling expenses by 3 percentage points, and administrative expenses by 1 percentage points. Thus, net income as a percent of sales by 3 percentage points.
In: Accounting
Vertical Analysis of Income Statement
Revenue and expense data for Innovation Quarter Inc. for two recent years are as follows:
| Current Year | Previous Year | |||
| Sales | $567,000 | $493,000 | ||
| Cost of goods sold | 385,560 | 310,590 | ||
| Selling expenses | 73,710 | 73,950 | ||
| Administrative expenses | 79,380 | 64,090 | ||
| Income tax expense | 11,340 | 19,720 | ||
a. Prepare an income statement in comparative form, stating each item for both years as a percent of sales. If required, round percentages to one decimal place. Enter all amounts as positive numbers.
| Innovation Quarter Inc. | ||||
| Comparative Income Statement | ||||
| For the Years Ended December 31 | ||||
| Current year Amount | Current year Percent | Previous year Amount | Previous year Percent | |
| Sales | $567,000 | % | $493,000 | % |
| Cost of goods sold | 385,560 | % | 310,590 | % |
| $ | % | $ | % | |
| Selling expenses | 73,710 | % | 73,950 | % |
| Administrative expenses | 79,380 | % | 64,090 | % |
| $ | % | $ | % | |
| % | % | |||
| Income tax expense | 11,340 | % | 19,720 | % |
| $ | % | $ | % | |
b. The vertical analysis indicates that the cost of goods sold as a percent of sales ___ by 5 percentage points, while selling expenses ___ by 2 percentage points, and administrative expenses ___ by 1 percentage points. Thus, net income as a percent of sales ___ by 2 percentage points.
In: Accounting
Vertical Analysis of Income Statement
Revenue and expense data for Innovation Quarter Inc. for two recent years are as follows:
| Current Year | Previous Year | |||
| Sales | $500,000 | $440,000 | ||
| Cost of goods sold | 340,000 | 277,200 | ||
| Selling expenses | 65,000 | 66,000 | ||
| Administrative expenses | 70,000 | 57,200 | ||
| Income tax expense | 10,000 | 17,600 | ||
a. Prepare an income statement in comparative form, stating each item for both years as a percent of sales. If required, round percentages to one decimal place. Enter all amounts as positive numbers.
| Innovation Quarter Inc. | ||||
| Comparative Income Statement | ||||
| For the Years Ended December 31 | ||||
| Current year Amount | Current year Percent | Previous year Amount | Previous year Percent | |
| Sales | $500,000 | % | $440,000 | % |
| Cost of goods sold | 340,000 | % | 277,200 | % |
| $ | % | $ | % | |
| Selling expenses | 65,000 | % | 66,000 | % |
| Administrative expenses | 70,000 | % | 57,200 | % |
| $ | % | $ | % | |
| % | % | |||
| Income tax expense | 10,000 | % | 17,600 | % |
| $ | % | $ | % | |
b. The vertical analysis indicates that the cost of goods sold as a percent of sales by 5 percentage points, while selling expenses by 2 percentage points, and administrative expenses by 1 percentage points. Thus, net income as a percent of sales by 2 percentage points.
In: Accounting
Vertical Analysis of Income Statement
Revenue and expense data for Innovation Quarter Inc. for two recent years are as follows:
| Current Year | Previous Year | |||
| Sales | $479,000 | $402,000 | ||
| Cost of goods sold | 273,030 | 205,020 | ||
| Selling expenses | 81,430 | 80,400 | ||
| Administrative expenses | 91,010 | 68,340 | ||
| Income tax expense | 14,370 | 20,100 | ||
a. Prepare an income statement in comparative form, stating each item for both years as a percent of sales. If required, round percentages to one decimal place. Enter all amounts as positive numbers.
| Innovation Quarter Inc. | ||||
| Comparative Income Statement | ||||
| For the Years Ended December 31 | ||||
| Current year Amount | Current year Percent | Previous year Amount | Previous year Percent | |
| Sales | $479,000 | % | $402,000 | % |
| Cost of goods sold | 273,030 | % | 205,020 | % |
| $ | % | $ | % | |
| Selling expenses | 81,430 | % | 80,400 | % |
| Administrative expenses | 91,010 | % | 68,340 | % |
| $ | % | $ | % | |
| % | % | |||
| Income tax expense | 14,370 | % | 20,100 | % |
| $ | % | $ | % | |
b. The vertical analysis indicates that the cost of goods sold as a percent of sales by 6 percentage points, while selling expenses by 3 percentage points, and administrative expenses by 2 percentage points. Thus, net income as a percent of sales by 3 percentage points.
In: Accounting