For 2014, Kasay Company initiated a sales promotion campaign that included the expenditure of an additional $30,000 for advertising. At the end of the year, Scott Brown, the president, is presented with the following condensed comparative income statement: Instructions 1. Prepare a comparative income statement for the two-year period, presenting an analysis of each item in relationship to net sales for each of the years. Round to one decimal place. 2. To the extent the data permit, comment on the significant relationships revealed by the vertical analysis prepared in(1).
For 2014, Kasay Company initiated a sales promotion campaign that included the expenditure of an additional $30,000 for advertising. At the end of the year, Scott Brown, the president, is presented with the following condensed comparative income statement: Instructions 1. Prepare a comparative income statement for the two-year period, presenting an analysis of each item in relationship to net sales for each of the years. Round to one decimal place. 2. To the extent the data permit, comment on the significant relationships revealed by the vertical analysis prepared in(1).
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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For 2014, Kasay Company initiated a sales promotion campaign that included the expenditure of an additional $30,000 for advertising. At the end of the year, Scott Brown, the president, is presented with the following condensed comparative income statement:
Instructions
1. Prepare a comparative income statement for the two-year period, presenting an analysis of each item in relationship to net sales for each of the years. Round to one decimal place.
2. To the extent the data permit, comment on the significant relationships revealed by the vertical analysis prepared in(1).
![Kasay Company
Comparative Income Statement
For the Years Ended December 31, 2014 and 2013
2014
2013
Sales
Sales returns and allowances.
$922,500
$820,000
22,500
20,000
Net sales....
$900,000
$800,000
Cost of goods sold.
Gross profit..
Selling expenses
360,000
340,000
$540,000
$216,000
$460,000
$176,000
Administrative expenses.
Total operating expenses
Income from operations
Other income.
81,000
$297,000
$243,000
72,000
$248,000
$212,000
92,000
135,000
Income before income tax
$378,000
$304,000
Income tax expense
270,000
$108,000
240,000
Net income
$ 64,000](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F869a8a33-8b71-48af-b196-62fd65a2eeb5%2F9f6c333e-5303-4558-950c-c887f9036282%2Fu2eljq_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Kasay Company
Comparative Income Statement
For the Years Ended December 31, 2014 and 2013
2014
2013
Sales
Sales returns and allowances.
$922,500
$820,000
22,500
20,000
Net sales....
$900,000
$800,000
Cost of goods sold.
Gross profit..
Selling expenses
360,000
340,000
$540,000
$216,000
$460,000
$176,000
Administrative expenses.
Total operating expenses
Income from operations
Other income.
81,000
$297,000
$243,000
72,000
$248,000
$212,000
92,000
135,000
Income before income tax
$378,000
$304,000
Income tax expense
270,000
$108,000
240,000
Net income
$ 64,000
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