a. Prepare a comparative income statement with horizontal analysis, indicating the increase (decrease) for the current year when compared with the previous year. If required, round to one decimal place. Winthrop Company Comparative Income Statement For the Years Ended December 31 Current Previous Increase Increase year year (Decrease) (Decrease) Amount Amount Amount Percent Sales $660,000 $500,000 $ % Cost of merchandise sold 554,700 430,000 Gross profit $105,300 $70,000 % Selling expenses $31,720 $26,000 $ Administrative expenses 28,600 22,000 Total operating expenses $60,320 $48,000 $ % Income before income tax expense $44,980 $22,000 % Income tax expense 18,000 8,800 Net income $26,980 $13,200 %

a. Prepare a comparative income statement with horizontal analysis, indicating the increase (decrease) for the current year when compared with the previous year. If required, round to one decimal place. Winthrop Company Comparative Income Statement For the Years Ended December 31 Current Previous Increase Increase year year (Decrease) (Decrease) Amount Amount Amount Percent Sales $660,000 $500,000 $ % Cost of merchandise sold 554,700 430,000 Gross profit $105,300 $70,000 % Selling expenses $31,720 $26,000 $ Administrative expenses 28,600 22,000 Total operating expenses $60,320 $48,000 $ % Income before income tax expense $44,980 $22,000 % Income tax expense 18,000 8,800 Net income $26,980 $13,200 %

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Common-Sized Income Statement Revenue and expense data for the current calendar year for Tannenhill Company and for the electronics industry are as follows. Tannenhill's data are expressed in dollars. The electronics industry averages are expressed in percentages. Electronics Tannenhill Industry Company Average Sales $820,000 100 % Cost of goods sold 524,800 70 Gross profit $295,200 30 % Selling expenses $180,400 17 % Administrative expenses 65,600 7 Total operating expenses $246,000 24 % Operating income $49,200 6 % Other revenue 16,400 2 $65,600 8 % Other expense 8,200 1 Income before income tax $57,400 7 % Income tax expense 24,600 4 Net income $32,800 3 %
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a. Prepare a comparative income statement with horizontal analysis, indicating the increase (decrease) for the current year when compared with the previous year. If required, round to one decimal place. Sales Cost of merchandise sold Gross profit Selling expenses Winthrop Company Comparative Income Statement For the Years Ended December 31 Administrative expenses Total operating expenses Income before income tax expense Income tax expense Net income profit to be Increase Current Previous Increase year year (Decrease) (Decrease) Amount Amount Amount Percent $611,000 $470,000 $ 520,700 410,000 $90,300 $27,600 24,320 $51,920 $38,380 15,400 $22,980 $60,000 $23.000 19,000 $42,000 $18,000 $ 7,200 $10,800 % % % % % % % % % b. The net income for Winthrop Company increased between years. This increase was the combined result of an in cost of merchandise sold. The cost of merchandise sold increased at a than the percentage increase in sales. in sales and percentage rate than the increase in…
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