Common-Sized Income Statement Revenue and expense data for the current calendar year for Sorenson Electronics Company and for the electronics industry are as follows. Sorenson Electronics Company data are expressed in dollars. The electronics industry averages are expressed in percentages. SorensonElectronicsCompany ElectronicsIndustryAverage Sales $1,940,000 100 % Cost of goods sold (1,358,000) (76) Gross profit $582,000 24 % Selling expenses $(329,800) (9) % Administrative expenses (116,400) (9) Total operating expenses $(446,200) (18) % Operating income $135,800 6 % Other revenue and expense: Other revenue 38,800 4 Other expense (19,400) (3) Income before income tax $155,200 7 % Income tax expense (58,200) (5) Net income $97,000 2 % a. Prepare a common-sized income statement comparing the results of operations for Sorenson Electronics Company with the industry average. If required, round percentages to one decimal place. Sorenson Electronics Company Common-Sized Income Statement Sorenson ElectronicsCompany Amount Sorenson ElectronicsCompany Percent Electronics IndustryAverage Sales $1,940,000 % 100% Cost of Goods Sold (1,358,000) % (76)% Gross profit $582,000 % 24% Selling Expenses $(329,800) % (9)% Administrative Expenses (116,400) % (9)% Total operating expenses $(446,200) % (18)% Operating income $135,800 % 6% Other revenue and expense: Other revenue 38,800 % 4% Other expense (19,400) % (3)% Income before income tax $155,200 % 7% Income tax expense (58,200) % (5)% Net income $97,000 % 2% b. Which of the following statements is true about Sorenson Electronics Company?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

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Common-Sized Income Statement

Revenue and expense data for the current calendar year for Sorenson Electronics Company and for the electronics industry are as follows. Sorenson Electronics Company data are expressed in dollars. The electronics industry averages are expressed in percentages.

	Sorenson Electronics Company	Electronics Industry Average
Sales	$1,940,000		100	%
Cost of goods sold	(1,358,000)		(76)
Gross profit	$582,000		24	%
Selling expenses	$(329,800)		(9)	%
Administrative expenses	(116,400)		(9)
Total operating expenses	$(446,200)		(18)	%
Operating income	$135,800		6	%
Other revenue and expense:
Other revenue	38,800		4
Other expense	(19,400)		(3)
Income before income tax	$155,200		7	%
Income tax expense	(58,200)		(5)
Net income	$97,000		2	%

a. Prepare a common-sized income statement comparing the results of operations for Sorenson Electronics Company with the industry average. If required, round percentages to one decimal place.

Sorenson Electronics Company
Common-Sized Income Statement

	Sorenson Electronics Company Amount	Sorenson Electronics Company Percent	Electronics Industry Average
Sales	$1,940,000	%	100%
Cost of Goods Sold	(1,358,000)	%	(76)%
Gross profit	$582,000	%	24%
Selling Expenses	$(329,800)	%	(9)%
Administrative Expenses	(116,400)	%	(9)%
Total operating expenses	$(446,200)	%	(18)%
Operating income	$135,800	%	6%
Other revenue and expense:
Other revenue	38,800	%	4%
Other expense	(19,400)	%	(3)%
Income before income tax	$155,200	%	7%
Income tax expense	(58,200)	%	(5)%
Net income	$97,000	%	2%

b. Which of the following statements is true about Sorenson Electronics Company?

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