Question

Scherer Company provided the following income statements for its first 3 years of operation:

Scherer Company

Income Statements

Years of Operation

1		Year 1	Year 2	Year 3
2	Net sales	$980,000.00	$1,078,000.00	$1,274,000.00
3	Less: Cost of goods sold	298,000.00	323,000.00	364,000.00
4	Gross margin	$682,000.00	$755,000.00	$910,000.00
5	Less:
6	Operating expenses	428,000.00	484,000.00	590,500.00
7	Income taxes	114,200.00	123,200.00	140,400.00
8	Net income	$139,800.00	$147,800.00	$179,100.00

	Required:
	Prepare common-size income statements by using net sales as the base.

Refer to the list below for the exact wording of an account title within your income statement.

Labels
Add
Less
Amount Descriptions
Add contribution margin
Cost of goods sold
Gross margin
Income taxes
Less contribution margin
Net income
Net loss
Net sales
Operating Expenses

Prepare common-size income statements by using net sales as the base. (Note: Enter all amounts as positive numbers and round answers to the nearest whole percentage. Percentages may not calculate down. Refer to the Labels and Amount Descriptions list provided for the exact wording of the answer choices for text entries.)

Scherer Company

Common-Size Income Statements

Years of Operation

1		Year 1	Year 1	Year 2	Year 2	Year 3	Year 3
2		Dollars	Percentage	Dollars	Percentage	Dollars	Percentage
3 amount deception _____
4 " "_______
5    " "_______
6 (Label)
7 ______
8 amount deception _____
9 amount deception _____

Answer 1

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