Question

Prepare a common-size income statement (component percentages) for the following income statement. Dollar Amount Sales revenue...

Prepare a common-size income statement (component percentages) for the following income statement.

Dollar Amount

Sales revenue

$200,000

Cost of goods sold

$80,000

Gross profit

$120,000

Operating expenses

$101,000

Interest expense

$4,000

Income before income tax

$15,000

Income tax expense (rate 20%)

$3,000

Net income
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Answer #1

A common-sized income statement is prepared in the table below.

In a common-sized income statement, all the components are expressed as a percentage of sales.

Dollar amount Common-sized
Sales revenue $   2,00,000.00 100.00%
Cost of goods sold $ 80,000.00 40.00%
Gross profit $   1,20,000.00 60.00%
Operating expenses $   1,01,000.00 50.50%
Interest expense $ 4,000.00 2.00%
Income before income tax $ 15,000.00 7.50%
Income tax expense (rate 20%) $ 3,000.00 1.50%
Net income $ 12,000.00 6.00%
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