Academic Integrity: tutoring, explanations, and feedback — we don’t complete graded work or submit on a student’s behalf.

GARRITY ELECTRONICS COMPANY Common-Size Income Statement Electronics Garrity Ind

ID: 2496810 • Letter: G

Question

GARRITY ELECTRONICS COMPANY

Common-Size Income Statement

Electronics

Garrity

Industry

Electronics Company

Average

Amount

Percent

Sales

$   4,728,800

102.5%

Sales returns and allowances

        128,800

2.5%

Net sales

$   4,600,000

100.0%

100.0%

Cost of goods sold

     2,668,000

61.0%

Gross profit

$   1,932,000

39.0%

Selling expenses

$   1,472,000

23.0%

Administrative expenses

        368,000

10.0%

Total operating expenses

$   1,840,000

33.0%

Operating income

$       92,000

6.0%

Other income

        138,000

3.0%

$     230,000

9.0%

Other expense

          46,000

1.0%

Income before income tax

$     184,000

8.0%

Income tax expense

        115,000

2.5%

Net income

$       69,000

1.5%

5.5%

Garrity Electronics Company Electronics Industry Average Sales $4,728,800 102.5% Sales returns and allowances 128,800 2.5 Net sales $4,600,000 100.0% Cost of goods sold 2,668,000 61.0 Gross profit $1,932,000 39.0% Selling expenses $1,472,000 23.0% Administrative expenses 368,000 10.0 Total operating expenses $1,840,000 33.0% Operating income $ 92,000 6.0% Other income 138,000 3.0 $ 230,000 9.0% Other expense 46,000 1.0 Income before income tax $ 184,000 8.0% Income tax expense 115,000 2.5 Net income $ 69,000 5.5% a. Prepare a common-sized income statement comparing the results of operations for Garrity Electronics Company with the industry average. b. As far as the data permit, comment on significant relationships revealed by the comparisons.

GARRITY ELECTRONICS COMPANY

Common-Size Income Statement

Electronics

Garrity

Industry

Electronics Company

Average

Amount

Percent

Sales

$   4,728,800

102.5%

Sales returns and allowances

        128,800

2.5%

Net sales

$   4,600,000

100.0%

100.0%

Cost of goods sold

     2,668,000

61.0%

Gross profit

$   1,932,000

39.0%

Selling expenses

$   1,472,000

23.0%

Administrative expenses

        368,000

10.0%

Total operating expenses

$   1,840,000

33.0%

Operating income

$       92,000

6.0%

Other income

        138,000

3.0%

$     230,000

9.0%

Other expense

          46,000

1.0%

Income before income tax

$     184,000

8.0%

Income tax expense

        115,000

2.5%

Net income

$       69,000

1.5%

5.5%

Explanation / Answer

GARRITY ELECTRONICS COMPANY Common-Size Income Statement Electronics Garrity Ind