Exercise 14-4 The comparative condensed income statements of Emley Corporation a

Question

Exercise 14-4 The comparative condensed income statements of Emley Corporation are shown below EMLEY CORPORATION For the Years Ended December 31 201 201 Net sales Cost of goods sold Gross profit Operating expenses Net income $792,000 579,600 212,400 150,000 $ 62,400 $721,000 504,000 217,000 144,000 $ 73,000 Prepare a horizontal analysis of the income statement data for Emley Corporation using 2016 as a base. (Enter negative amounts and percentages using either a negative sign preceding the number e.g.-45,-45% or parentheses e.g. (45), (45%). Round percentages to 1 decimal place, e.g. 12.396.) EMLEY CORPORATION Increase or (Decrease) During 2017 rcenta Net sales $792,000 $721,000 Cost of goods sold 579,600 504,000 Gross profit 212,400 217,000 150,000 144,000 Net income $62,400 $73,000 Prepare a vertical analysis of the income statement data for Emley Corporation in columnar form for both years. (Round percentages to 1 decimal place, eg, 12.3%.) EMLEY CORPORATION 2017 2016 Net sales 792,000 $ 721,000 Cost of goods sold 579,600 504,000 Gross profit 212,400 217,000 150,000 144,000 Net income 62,400 $73,000

Explanation / Answer

a) Hortizontal analysis :

b) Vertical analysis

Increase (decrease) 2017 2016 Amount percentage Net Sales 792000 721000 71000 9.8% Cost of goods sold 579600 504000 75600 15% Gross profit 212400 217000 -4600 -2.1% Operating expenses 150000 144000 6000 4.2% Net income 62400 73000 -10600 -14.5%

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