Question

SLO 2 Complete the financial statements of accounting. Identify each according to GAAP. Consider the following:...

SLO 2 Complete the financial statements of accounting. Identify each according to GAAP.

Consider the following:

Required:

  1. Prepare a vertical comparative income statement basing percentages on net sales for each year.
  2. Round percentages to two decimal places. Do not enter the percent sign.
  3. For example, 60% would be entered as 60.
  4. Please Note: Take your time and make sure that the decimals are in the correct place. If the decimals are not in the correct place, your answer is not correct. (42 points total)
O'Farrell and O'Brien Corporation
Comparative Income Statement
For the Years Ended December 31, 20-B and 20-A
20-B Amount 20-B Percent 20-A Amount 20-A Percent
Net sales $660,000 $720,000
Cost of goods sold 298,000 390,000
Gross profit $362,000 $330,000
Operating expenses 244,000 257,000
Operating income $118,000 $73,000
Other revenues and expenses (8,500) (8,650)
Income before income taxes $109,500 $64,350
Income tax expense 17,300 14,740
Net income $92,200 $49,610

Homework Answers

Answer #1

Answer to Question :

Vertical Analysis for the Income Statement
Particulars 20 B($) Vertical Analysis 20 A($) Vertical Analysis
Net Sales 660000 100.00 242000 100.00
Cost of goods sold 298000 45.15 175000 72.31
Gross Profit 362000 54.85 67000 27.69
Operating Expenses 244000 36.97 24000 9.92
Operating Income 118000 17.88 43000 17.77
Other Revenues and Expenses 8,500 1.29 3000 1.24
Net Income before Tax 109500 16.59 40000 16.53
Income Tax Expenses 17,300 2.62 8000 3.31
Net Income 92200 13.97 32000 13.22
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