Question

                         Fishing Experiences Comparative             &nbsp

                         Fishing Experiences Comparative

                              Income Statement

For the Years Ended Decemeber 31, 2014 and 2013

          20Y6                          Percent                  20Y5            Percent

Sales                      200,000              ?          1 ,000,000                      ?

Costs of goods sold   -624,000                ?        -558,000                      ?

Gross profit               576,000                   ?         442,000                      ?

Selling expenses     -120,000                      ?        -75,000                      ?

Administrative expenses -50,000                   ? -50,000            ?

Total operating expenses -170,000                 ?              -125,000          ?

Income from operations       406,000              ?            317,000              ?

Other income                      30,000                   ?             30,000           ?

Income before income tax    436,000                ?          347,000             ?

Income tax expenses           -100,000              ?     -90,000              ?

Net income                 336,000                         ?    257,000                ?

Prepare a comparative income statement for the two-year period, presenting an analysis of each item in relationship to sales for each of the years. Round your percentages to one decimal place. Enter all amounts as positive numbers.

To the extent the data permit, comment on the significant relationships revealed by the vertical analysis prepared in (1).

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Answer #1

Fishing Experiences

Comparative Income Statement

For the Years Ended December 31, 2014 and 2013

Sales

1,200,000

100 %

1,000,000

100 %

Cost of goods sold

624,000

52 %

558,000

55.8 %

Gross profit

576,000

48 %

442,000

44.2 %

Selling expenses

120,000

10 %

75,000

7.5 %

Administrative expenses

50,000

4.2 %

50,000

5 %

Total operating expenses

170,000

14.2 %

125,000

12.5 %

Income from operations

406,000

33.8 %

317,000

31.7 %

Other income

30,000

2.5 %

30,000

3 %

Income before income tax

436,000

36.3 %

347,000

34.7 %

Income tax expense

100,000

8.3 %

90,000

9 %

Net income

336,000

28 %

257,000

25.7 %

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