Aa a For 20Y6, Fishing Experiences Inc. initiated a sales promotion campaign tha

Question

Aa a For 20Y6, Fishing Experiences Inc. initiated a sales promotion campaign that included the expenditure of an additional $45,000 for advertising. At the end of the year, Colt Schultz, the president, is presented with the following condensed comparative income statement: FISHING EXPERIENCES INC. Comparative Income Statement For the Years Ended December 31, 20Y6 and 20YS 20Y6 20YS Sales Cost of goods sold Gross proft Selling expenses Administrative expenses Total operating expenses Operating income Other revenue Income before income tax Income tax expense Net income 1,200,000 $1,000,000 576,000 (120,000) (50,000) 70,000) 406,000 30,000 436,000 (100,000) 336,000 75,000) (50,000) (125,000 317,000 30,000 347,000 90,000) 257,000 Instructions Prepare a comparative income statement for the two-year period, presenting a vertical analysis of each item in relationship to sales for each of the vears. 1. Less than a minute 17 pages left

Explanation / Answer

FISHING EXPERIENCES INC. Comparitive Income Statement - Vertical Analysis For the Year Ended Dec 31, 20Y6 and 20Y5 20Y6 20Y5 Amount % Sales Amount % Sales Sales    1,200,000.00 100.00%    1,000,000.00 100.00% Cost of Goods Sold     (624,000.00) -52.00%     (558,000.00) -55.80% Gross Profit        576,000.00 48.00%        442,000.00 44.20% Selling Expenses     (120,000.00) -10.00%        (75,000.00) -7.50% Administrative Expenses        (50,000.00) -4.17%        (50,000.00) -5.00% Total Operating Expenses     (170,000.00) -14.17%     (125,000.00) -12.50% Operating Income        406,000.00 33.83%        317,000.00 31.70% Other Revenue          30,000.00 2.50%          30,000.00 3.00% Income before Income Tax        436,000.00 36.33%        347,000.00 34.70% Income Tax Expense     (100,000.00) -8.33%        (90,000.00) -9.00% Net Income        336,000.00 28.00%        257,000.00 25.70%

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