42,000 (b) Prepare a horizontal analysis of the income statement for Cookie & Co

Question

42,000

(b) Prepare a horizontal analysis of the income statement for Cookie & Coffee Creations Inc. using 2017 as a base year.

(c) Prepare a vertical analysis of the income statement for Cookie & Coffee Creations Inc. for 2018 and 2017.

2018 vertical analysis 2017 vertical analysis difference horizontal anaylsis sales $485,625 100% $462,500 100% cost of goods sold 222,694 208,125 gross profit 262,931 254,375 operating expenses saleries and wages expenses 147,979 146,350 depreciation expense 17,600 9,100 other operating expenses 48,186 42,925 total operating expenses 213,765 198,375 income from operations 49,166 56,000 other expenses interest expense 413 0 loss on disposal of plant assests 2,500 0 total other expenses 2,913 0 income before income tax 46,253 56,000 income tax expense 9,251 14,000 net income 37,002

42,000

Explanation / Answer

Answer a. Horizontal Analysis of Income Statement 2018 2017 difference horizontal anaylsis sales            485,625           462,500                23,125 5.00% cost of goods sold            222,694           208,125                14,569 7.00% gross profit            262,931           254,375                  8,556 3.36% operating expenses saleries and wages expenses            147,979           146,350                  1,629 1.11% depreciation expense              17,600                9,100                  8,500 93.41% other operating expenses              48,186              42,925                  5,261 12.26% total operating expenses            213,765           198,375                15,390 7.76% income from operations              49,166              56,000                (6,834) -12.20% other expenses interest expense                    413                       -                        413 N.A loss on disposal of plant assests                2,500                       -                    2,500 N.A total other expenses                2,913                       -                    2,913 N.A income before income tax              46,253              56,000                (9,747) -17.41% income tax expense                9,251              14,000                (4,749) -33.92% net income              37,002              42,000                (4,998) -11.90% Answer b. Vertical Analysis of Income Statement 2018 2017 sales            485,625 100.00%              462,500 100.00% cost of goods sold            222,694 45.86%              208,125 45.00% gross profit            262,931 54.14%              254,375 55.00% operating expenses saleries and wages expenses            147,979 30.47%              146,350 31.64% depreciation expense              17,600 3.62%                  9,100 1.97% other operating expenses              48,186 9.92%                42,925 9.28% total operating expenses            213,765 44.02%              198,375 42.89% income from operations              49,166 10.12%                56,000 12.11% other expenses interest expense                    413 0.09%                         -   0.00% loss on disposal of plant assests                2,500 0.51%                         -   0.00% total other expenses                2,913 0.60%                         -   0.00% income before income tax              46,253 9.52%                56,000 12.11% income tax expense                9,251 1.90%                14,000 3.03% net income              37,002 7.62%                42,000 9.08%

Related Questions

Navigate

• Browse (All)
• Browse 4
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.