Question

Revenue and expense data for the current calendar year for Sorenson Electronics Company and for the electronics industry are as follows. The Sorenson Electronics Company data are expressed in dollars. The electronics industry averages are expressed in percentages.

	Sorenson Electronics Company			Electronics Industry Average
Sales	$1,152,600			102	%
Sales returns and allowances	22,600			2
Net sales	$1,130,000			100	%
Cost of goods sold	610,200			57
Gross profit	$519,800			43	%
Selling expenses	$327,700			26	%
Administrative expenses	124,300			11
Total operating expenses	$452,000			37	%
Operating income	$67,800			6	%
Other income	22,600			2
	$90,400			8	%
Other expense	11,300			1
Income before income tax	$79,100			7	%
Income tax expense	33,900			3
Net income	$45,200			4	%

a. Prepare a common-sized income statement comparing the results of operations for Sorenson Electronics Company with the industry average. If required, round percentages to one decimal place. Enter all amounts as positive numbers.

Sorenson Electronics Company
Common-Sized Income Statement
For the Year Ended December 31, 20xx
		Sorenson Electronics Company Amount		Sorenson Electronics Company Percent		Electronics Industry Average
Sales		$ 1,152,600		%		102 %
Sales returns and allowances		22,600		%		2 %
Net sales		$ 1,130,000		%		100.0 %
Cost of goods sold		610,200		%		57 %
Gross profit		$ 519,800		%		43 %
Selling expenses		$ 327,700		%		26 %
Administrative expenses		124,300		%		11 %
Total operating expenses		$ 452,000		%		37 %
Operating income		$ 67,800		%		6 %
Other income		22,600		%		2 %
		$ 90,400		%		8 %
Other expense		11,300		%		1 %
Income before income tax		$ 79,100		%		7 %
Income tax expense		33,900		%		3 %
Net income		$ 45,200		%		4 %

Answer 1