PLEASE HELP Vertical Analysis of Income Statement For 2014, Othere Technology Co

Question

PLEASE HELP

Vertical Analysis of Income Statement

For 2014, Othere Technology Company initiated a sales promotion campaign that included the expenditure of an additional $16,000 for advertising. At the end of the year, George Wallace, the president, is presented with the following condensed comparative income statement:

Required:

1. Prepare a comparative income statement for the two-year period, presenting an analysis of each item in relationship to net sales for each of the years. Enter percentages as whole numbers. Enter all amounts as positive numbers.

Othere Technology Company

Comparative Income Statement

For the Years Ended December 31, 2014 and 2013

2014 Amount

2014 Percent

2013 Amount

2013 Percent

Sales

$ 560,550

  %_____

$ 486,540

  %______

Sales returns and allowances

5,550

  %___

9,540

  %___

Net sales

$ 555,000

  %____

$ 477,000

  %____

Cost of goods sold

255,300

  %___

248,040

  %___

Gross profit

$ 299,700

  %___

$ 228,960

  %___

Selling expenses

$ 105,450

  %___

$ 85,860

  %___

Administrative expenses

55,500

  %___

57,240

  %___

Total operating expenses

$ 177,600

  %___

$ 143,100

  %___

Income from operations

$ 122,100

  %___

$ 85,860

  %___

Other income

27,750

  %___

14,310

  %___

Income before income tax

$ 149,850

  %___

$ 100,170

  %___

Income tax expense

61,050

  %___

38,160

  %___

Net income

$ 88,800

  %___

$ 62,010

%___

Othere Technology Company
Comparative Income Statement
For the Years Ended December 31, 2014 and 2013 2014 2013 Sales $560,550 $486,540 Sales returns and allowances 5,550 9,540 Net sales $555,000 $477,000 Cost of goods sold 255,300 248,040 Gross profit $299,700 $228,960 Selling expenses $105,450 $85,860 Administrative expenses 55,500 57,240 Total operating expenses $177,600 $143,100 Income from operations $122,100 $85,860 Other income 27,750 14,310 Income before income tax $149,850 $100,170 Income tax expense 61,050 38,160 Net income $88,800 $62,010

Explanation / Answer

2014 Percentage 2013 Percentage sales 560550 100 486540 100 Sales returns and allowances 5550 0.990099 9540 1.960784 Net Sales 555000 99.0099 477000 98.03922 Cost of goods sold 255300 45.54455 248040 50.98039 Gross Profit 299700 53.46535 228960 47.05882 Selling Expenses 105450 18.81188 85860 17.64706 Admin Expenses 55500 9.90099 57240 11.76471 Total Operating Expenses 177600 31.68317 143100 29.41176 Income from Operations 122100 21.78218 85860 17.64706 Other Income 27750 4.950495 14310 2.941176 Income before Income Tax 149850 26.73267 100170 20.58824 Income Tax Expense 61050 10.89109 38160 7.843137 Net Income 88800 15.84158 62010 12.7451

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