Question

# Vertical Analysis of Income Statement Revenue and expense data for Innovation Quarter Inc. for two recent...

Vertical Analysis of Income Statement

Revenue and expense data for Innovation Quarter Inc. for two recent years are as follows:

 Current Year Previous Year Sales \$435,000 \$396,000 Cost of goods sold 269,700 221,760 Selling expenses 65,250 71,280 Administrative expenses 73,950 59,400 Income tax expense 8,700 15,840

a. Prepare an income statement in comparative form, stating each item for both years as a percent of sales. If required, round percentages to one decimal place. Enter all amounts as positive numbers.

(For the blanks on the far left the answer options are: Gross profit | Income from Operations | Net Income | Total operating expenses)

 Innovation Quarter Inc. Comparative Income Statement For the Years Ended December 31 Current year Amount Current year Percent Previous year Amount Previous year Percent Sales \$435,000 ________% \$396,000 ________% Cost of goods sold 269,700 ________% 221,760 ________% _____________ \$______ ________% \$____ ________% Selling expenses 65,250 ________% 71,280 ________% Administrative expenses 73,950 _________% 59,400 ________% ___________ \$______ _________% \$_____ ________% __________ _______ _________% ______ ________% Income tax expense 8,700 _________% 15,840 ________% _____________ \$_____ ________% \$_____ ________%

 Innovation Quarter Inc. Comparative Income Statement For the Years Ended December 31 Current year Amount Current year Percent Previous year Amount Previous year Percent Sales \$435,000 100.0% \$396,000 100.0% Cost of goods sold \$269,700 62.0% \$221,760 56.0% Gross Profits \$165,300 38.0% \$174,240 44.0% Selling expenses \$65,250 15.0% \$71,280 18.0% Administrative expenses \$73,950 17.0% \$59,400 15.0% Total Operating expense \$139,200 32.0% \$130,680 33.0% Operating income or Income from Operations \$26,100 6.0% \$43,560 11.0% Income tax expense \$8,700 2.0% \$15,840 4.0% Net Income \$17,400 4.0% \$27,720 7.0%

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