Question 1 The comparative condensed income statements of Emley Corporation are

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Question 1 The comparative condensed income statements of Emley Corporation are shown below. EMLEY CORPORATION Comparative Condensed Income Statements For the Years Ended December 31 Net sales Cost of goods sold Gross profit Operating expenses Net income 2017 $693,000 506,150 186,850 131,250 $55,600 2016 $630,000 441,000 189,000 126,000 $63,000 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. 12.3%.) EMLEY CORPORATION Income Statements Increase or (Decrease) During 2017 2017 2016 Amount Percentage 693,000 $630,000 Cost of goods sold 506,150 441,000 186,850 189,000 Operating expenses 131,250 126,000 $55,600 $63,000 Net sales Gross profit Net income Prepare a vertical analysis of the income statement data for Emley Corporation in columnar form for both years. (Round percentages to 1 decimal

Explanation / Answer

EMLEY CORPORATION condensed income statements for the year ended december 31 2017 2016 amount percentage net sales 693000 630000 63000 10.00% cost of goods sold 506150 441000 65150 14.77% gross profit 186850 189000 -2150 1.14% operating expenses 131250 126000 5250 4.17% net income 55600 63000 -7400 11.75% Amount (difference) = amounts of 2017 - amounts of 2016 for eg. Amount (difference ) for cost of good sold = (506150-441000) = 65150 percentage = difference / amount of 2016 for percentage of cost of goods sold = 65150/441000 = 14.77% EMLEY CORPORATION condensed income statements for the year ended december 31 2017 percentage 2016 percentage net sales 693000 100.00% 630000 100.00% cost of goods sold 506150 73.04% 441000 70.00% gross profit 186850 26.96% 189000 30.00% operating expenses 131250 18.94% 126000 20.00% net income 55600 8.02% 63000 10.00% percentages 2016 = variables 2016 / net sales 2016 for eg . Percentage for cost of goods sold 2016 = 441000/630000 = 70.00% percentages 2017= variables 2017 / net sales 2017 for eg . Percentage for cost of goods sold 2016 = 506150/693000 = 73.04%

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