Loose Leaf for Financial Accounting: Information for Decisions
9th Edition
ISBN: 9781260158762
Author: John J Wild
Publisher: McGraw-Hill Education
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Chapter 13, Problem 5E
Summary Introduction
Concept Introduction:
Common size analysis is used to compare the % of each item of a financial statement taking one item as a basis. In case of a common size income statement, the net sales amount is taken as basis and % is calculated for each item in the income statement.
To indicate:if the net income has increased, decreased, or remained unchanged in the given period of three years.
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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
Cost of merchandise sold
Selling expenses
Administrative expenses
Income tax expense
Sales
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
$388,000 100
248,320
Cost of merchandise sold
Gross profit
Selling expenses
Administrative expenses
Total operating expenses
Income from operations
Income tax expense
$388,000
248,320
54,320
62,080
7,760
Net income
$353,000
208,270
56,480
52,950
14,120
$
54,320
62,080
7,760
%
%
%
%
%
%
%
%
%
Previous year Amount Previous year Percent
$353,000 100 ✓ %
208,270
$
56,480
52,950
14,120
%
%
%
%
%
%
%
%
Common-size and trend percents for Roxi Company’s sales, cost of goods sold, and expenses follow. Determine whether net income increased, decreased, or remained unchanged in this three-year period.
Common-size and trend percents for Roxi
Company's sales, cost of goods sold, and
expenses follow.
Current Year
Sales
Cost of goods
sold
Operating
expenses
Common-Size
Percents
1 Year Ago
100.0%
63.2
14.2
Trend
Percents
2 Years Ago
100.0%
61.0
13.7
Determine the net income for the following
years. Did the net income increase,
decrease, or remain unchanged in this
three-year period?
Current
Year
100.0%
57.6
14.0
1 Year
Years
Ago
Ago
103.9% 102.7%
108.8
114.0
105.4
100.5
100.0
100.0
100.0
Chapter 13 Solutions
Loose Leaf for Financial Accounting: Information for Decisions
Ch. 13 - Explain the difference between financial reporting...Ch. 13 - Prob. 2DQCh. 13 - Prob. 3DQCh. 13 - Prob. 4DQCh. 13 - Prob. 5DQCh. 13 - Prob. 6DQCh. 13 - Prob. 7DQCh. 13 - Prob. 8DQCh. 13 - Prob. 9DQCh. 13 - Prob. 10DQ
Ch. 13 - Prob. 11DQCh. 13 - Prob. 12DQCh. 13 - Prob. 13DQCh. 13 - Prob. 14DQCh. 13 - Prob. 15DQCh. 13 - Prob. 16DQCh. 13 - Prob. 17DQCh. 13 - Prob. 1QSCh. 13 - Prob. 2QSCh. 13 - Prob. 3QSCh. 13 - Prob. 4QSCh. 13 - Prob. 5QSCh. 13 - Prob. 6QSCh. 13 - Prob. 7QSCh. 13 - Prob. 8QSCh. 13 - Which of the following gains or losses would...Ch. 13 - Prob. 1ECh. 13 - Prob. 2ECh. 13 - Prob. 3ECh. 13 - Prob. 4ECh. 13 - Prob. 5ECh. 13 - Prob. 6ECh. 13 - Prob. 7ECh. 13 - Prob. 10ECh. 13 - Prob. 12ECh. 13 - Prob. 13ECh. 13 - Prob. 14ECh. 13 - Prob. 15ECh. 13 - Prob. 16ECh. 13 - Prob. 1PSACh. 13 - Prob. 2PSACh. 13 - Prob. 3PSACh. 13 - Prob. 5PSACh. 13 - Prob. 6PSACh. 13 - Selected comparative financial statements of...Ch. 13 - Prob. 2PSBCh. 13 - Prob. 3PSBCh. 13 - Prob. 5PSBCh. 13 - Prob. 6PSBCh. 13 - Prob. 13SPCh. 13 - Prob. 2FSACh. 13 - Prob. 3FSACh. 13 - Prob. 1BTNCh. 13 - Prob. 5BTN
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