Question

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

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