Accounting
27th Edition
ISBN: 9781337272094
Author: WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher: Cengage Learning,
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Question
Chapter 17, Problem 17.2APR
1)
To determine
Vertical Analysis
Vertical analysis is prepared to analyze the relationship among various financial statements with a particular base amount.
Formula:
This analysis is otherwise called as common-size statement.
To prepare: Comparative income statement for the two-year period.
Given info: Income statement for the two year period.
2)
To determine
To comment: Significant relationships revealed by the horizontal analysis.
Expert Solution & Answer
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Vertical Analysis of Income Statement
For 20Y2, Tri-Comic Company initiated a sales promotion campaign that included the expenditure of an additional $21,000 for advertising. At the end of the year, Lumi Neer, the president, is presented with the following condensed comparative income statement:
Tri-Comic CompanyComparative Income StatementFor the Years Ended December 31, 20Y2 and 20Y1
20Y2
20Y1
Sales
$741,000
$637,000
Cost of merchandise sold
348,270
337,610
Gross profit
$392,730
$299,390
Selling expenses
$148,200
$121,030
Administrative expenses
74,100
76,440
Total operating expenses
$222,300
$197,470
Income from operations
$170,430
$101,920
Other revenue
29,640
31,850
Income before income tax expense
$200,070
$133,770
Income tax expense
81,510
50,960
Net income
$118,560
$82,810
Required:
Question Content Area
1. Prepare a comparative income statement for the two-year period, presenting an analysis of each item in…
Vertical analysis of income statement
For 20Y2, Tri-Comic Company initiated a sales promotion campaign that included the expenditure of an additional $50,000 for advertising. At the end of the year, Lumi Neer, the president, is presented with the following condensed comparative income statement:
Tri-Comic Company
Comparative Income Statement
For the Years Ended December 31, 20Y2 and 20Y1
20Y2
20Y1
Sales
$ 1,500,000
$ 1,250,000
Cost of goods sold
(510,000)
(475,000)
Gross profit
$ 990,000
$ 775,000
Selling expenses
$ (270,000)
$ (200,000)
Administrative expenses
(180,000)
(156,250)
Total operating expenses
$ (450,000)
$ (356,250)
Operating income
$ 540,000
$ 418,750
Other revenue
60,000
50,000
Income before income tax expense
$ 600,000
$ 468,750
Income tax expense
(450,000)
(375,000)
Net income
$ 150,000
$ 93,750
1. Prepare a comparative income statement for the two-year period, presenting an analysis of each item in relationship to sales for…
Vertical Analysis of Income Statement
For 20Y2, Fielder Industries Inc. initiated a sales promotion campaign that included the expenditure of an additional $40,000 for advertising. At the end of the year, Leif Grando, the president, is presented with the following condensed comparative income statement:
Fielder Industries Inc.Comparative Income StatementFor the Years Ended December 31, 20Y2 and 20Y1
20Y2
20Y1
Sales
$1,300,000
$1,180,000
Cost of goods sold
(682,500)
(613,600)
Gross profit
$617,500
$566,400
Selling expenses
$(260,000)
$(188,800)
Administrative expenses
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(177,000)
Total operating expenses
$(429,000)
$(365,800)
Operating income
$188,500
$200,600
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70,800
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$266,500
$271,400
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(117,000)
(106,200)
Net income
$149,500
$165,200
Required:
Question Content Area
1. Prepare a comparative income statement for the two-year period,…
Chapter 17 Solutions
Accounting
Ch. 17 - Prob. 1DQCh. 17 - Prob. 2DQCh. 17 - A companys current year net income (after income...Ch. 17 - How would the current and quick ratios of a...Ch. 17 - Prob. 5DQCh. 17 - What do the following data, taken from a...Ch. 17 - a. How does the return on total assets differ from...Ch. 17 - Kroger, a grocery store, recently had a price-...Ch. 17 - Prob. 9DQCh. 17 - Prob. 10DQ
Ch. 17 - Horizontal analysis The comparative temporary...Ch. 17 - Prob. 17.1BPECh. 17 - Vertical analysis Income statement information for...Ch. 17 - Vertical analysis Income statement information for...Ch. 17 - Prob. 17.3APECh. 17 - Prob. 17.3BPECh. 17 - Accounts receivable analysis A company reports the...Ch. 17 - Accounts receivable analysis A company reports the...Ch. 17 - Inventory analysis A company reports the...Ch. 17 - Inventory analysis A company reports the...Ch. 17 - Prob. 17.6APECh. 17 - Long-term solvency analysis The following...Ch. 17 - Times interest earned A company reports the...Ch. 17 - Times interest earned A company reports the...Ch. 17 - Asset turnover A company reports the following:...Ch. 17 - Asset turnover A company reports the following:...Ch. 17 - Return on total assets A company reports the...Ch. 17 - Return on total assets A company reports the...Ch. 17 - Common stockholders profitability analysis A...Ch. 17 - Common stockholders profitability analysis A...Ch. 17 - Prob. 17.11APECh. 17 - Prob. 17.11BPECh. 17 - Prob. 17.1EXCh. 17 - Prob. 17.2EXCh. 17 - Common-sized income statement Revenue and expense...Ch. 17 - Vertical analysis of balance sheet Balance sheet...Ch. 17 - Horizontal analysis of the income statement Income...Ch. 17 - Current position analysis The following data were...Ch. 17 - Prob. 17.7EXCh. 17 - Current position analysis The bond indenture for...Ch. 17 - Accounts receivable analysis The following data...Ch. 17 - Accounts receivable analysis Xavier Scores Company...Ch. 17 - Inventory analysis The following data were...Ch. 17 - Inventory analysis QT, Inc. and Elppa Computers,...Ch. 17 - Ratio of liabilities to stockholders equity and...Ch. 17 - Ratio of liabilities to stockholders equity and...Ch. 17 - Ratio of liabilities to stockholders equity and...Ch. 17 - Prob. 17.16EXCh. 17 - Profitability ratios The following selected data...Ch. 17 - Profitability ratios Ralph Lauren Corporation...Ch. 17 - Six measures of solvency or profitability The...Ch. 17 - Five measures of solvency or profitability The...Ch. 17 - Prob. 17.21EXCh. 17 - Prob. 17.22EXCh. 17 - Earnings per share, discontinued operations The...Ch. 17 - Prob. 17.24EXCh. 17 - Prob. 17.25EXCh. 17 - Prob. 17.1APRCh. 17 - Prob. 17.2APRCh. 17 - Prob. 17.3APRCh. 17 - Measures of liquidity, solvency, and profitability...Ch. 17 - Solvency and profitability trend analysis Addai...Ch. 17 - Prob. 17.1BPRCh. 17 - Prob. 17.2BPRCh. 17 - Effect of transactions on current position...Ch. 17 - Measures of liquidity, solvency and profitability...Ch. 17 - Solvency and profitability trend analysis Crosby...Ch. 17 - Financial statement analysis The financial...Ch. 17 - Prob. 17.1CPCh. 17 - Prob. 17.3CPCh. 17 - Common-sized income statements The condensed...Ch. 17 - Profitability analysis Deere Company manufactures...Ch. 17 - Comprehensive profitability and solvency analysis...
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