Question

Common-Size Income Statements Consider the following income statement data from the Ross Company: 2013 2012 Sales...

Common-Size Income Statements
Consider the following income statement data from the Ross Company:

2013 2012
Sales revenue $525,000 $450,000
Cost of goods sold 336,000 279,000
Selling expenses 107,000 101,000
Administrative expenses 62,000 56,000
Income tax expense 9,800 7,400


Prepare common-size income statements for each year.

Note: Round answers to one decimal place (ex: 0.2345 = 23.5%).

ROSS COMPANY
Common-Size Income Statements
(Percent of Sales Revenue)
2013 2012
Sales Revenue Answer Answer
Cost of Goods Sold Answer Answer
Gross Profit on Sales Answer Answer
Operating Expenses
Selling Expenses Answer Answer
Administrative Expenses Answer Answer
Total Answer Answer
Income before Income Taxes Answer Answer
Income Tax Expense Answer Answer
Net Income Answer Answer

Homework Answers

Answer #1
ROSS COMPANY
Common-Size Income Statements
(Percent of Sales Revenue)
2013 % 2012 %
Sales Revenue 525,000 100% 450,000 100%
Cost of Goods Sold 336,000 336,000/525,000 = 64% 279,000 279,000/450,000 = 62%
Gross Profit on Sales 189,000 189,000/525,000 = 36% 171,000 171,000/450,000 = 38%
Operating Expenses
Selling Expenses 107,000 107,000/525,000 = 20.4% 101,000 101,000/450,000 = 22.4%
Administrative Expenses 62,000 62,000/525,000 = 11.8% 56,000 56,000/450,000 = 12.4%
Total 169,000 169,000/525,000 = 32.2% 157,000 157,000/450,000 = 34.9%
Income before Income Taxes 20,000 20,000/525,000 = 3.8% 14,000 14,000/450,000 = 3.1%
Income Tax Expense 9,800 9,800/525,000 = 1.9% 7,400 7,400/450,000 = 1.6%
Net Income 10,200 10,200/525,000 = 1.9% 6,600 6,600/450,000 = 1.5%
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