Danielle's Design Services Income Statement

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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### Danielle's Design Services: Income Statement Analysis

Two income statements for Danielle's Design Services are shown below:

#### Income Statements for Years 1 and 2 Ending December 31

| **Category**           | **Year 2** | **Year 1** |
|------------------------|------------|------------|
| Fees earned            | $765,340   | $696,520   |
| Operating expenses:    |            |            |
| Wages expense          | $254,000   | $214,600   |
| Rent expense           | $120,000   | $108,000   |
| Supplies expense       | $76,500    | $98,715    |
| Miscellaneous expense  | $11,680    | $16,420    |
| **Total operating expenses** | $462,180 | $437,735 |
| **Net income**         | $303,160   | $258,785   |

#### Instructions for Vertical Analysis:

a. Prepare a vertical analysis of Danielle's Design Services income statements. Determine total operating expenses percentage by adding the expense percentages. Determine the net income percentage by deducting total operating expenses percentage from fees earned percentage. If required, round your percentages to one decimal place. Do not enter the percent sign.

#### Vertical Analysis Table:

| **Category**           | **Year 2 Amount** | **Year 2 Percent** | **Year 1 Amount** | **Year 1 Percent** |
|------------------------|-------------------|--------------------|-------------------|--------------------|
| Fees earned            | $765,340          |       %            | $696,520          |        %           |
| Operating expenses:    |                   |                    |                   |                    |
| Wages expense          | $254,000          |       %            | $214,600          |        %           |
| Rent expense           | $120,000          |       %            | $108,000          |        %           |
| Supplies expense       | $76,500           |       %            | $98,715           |        %           |
| Miscellaneous expense  | $11,680           |       %            | $16,420           |        %           |
| **Total operating expenses** | $462,180   |       %            | $437,735          |        %           |
| **Net income**         | $303,160          |       %
Transcribed Image Text:### Danielle's Design Services: Income Statement Analysis Two income statements for Danielle's Design Services are shown below: #### Income Statements for Years 1 and 2 Ending December 31 | **Category** | **Year 2** | **Year 1** | |------------------------|------------|------------| | Fees earned | $765,340 | $696,520 | | Operating expenses: | | | | Wages expense | $254,000 | $214,600 | | Rent expense | $120,000 | $108,000 | | Supplies expense | $76,500 | $98,715 | | Miscellaneous expense | $11,680 | $16,420 | | **Total operating expenses** | $462,180 | $437,735 | | **Net income** | $303,160 | $258,785 | #### Instructions for Vertical Analysis: a. Prepare a vertical analysis of Danielle's Design Services income statements. Determine total operating expenses percentage by adding the expense percentages. Determine the net income percentage by deducting total operating expenses percentage from fees earned percentage. If required, round your percentages to one decimal place. Do not enter the percent sign. #### Vertical Analysis Table: | **Category** | **Year 2 Amount** | **Year 2 Percent** | **Year 1 Amount** | **Year 1 Percent** | |------------------------|-------------------|--------------------|-------------------|--------------------| | Fees earned | $765,340 | % | $696,520 | % | | Operating expenses: | | | | | | Wages expense | $254,000 | % | $214,600 | % | | Rent expense | $120,000 | % | $108,000 | % | | Supplies expense | $76,500 | % | $98,715 | % | | Miscellaneous expense | $11,680 | % | $16,420 | % | | **Total operating expenses** | $462,180 | % | $437,735 | % | | **Net income** | $303,160 | %
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