For 2014, Lindell Company reported its most significant decline in net income in years. At the end of the year, H. Finn, the president, is presented with the following condensed comparative income statement: Instructions1. Prepare a comparative income statement with horizontal analysis for the two-year period, using 2013 as the base year. Round to one decimal place.2. To the extent the data permit, comment on the significant relationships revealed by the horizontal analysis prepared in(1). Lindell CompanyComparative Income StatementFor the Years Ended December 31, 2014 and 201320142013Sales$1,092,500$950,000Sales returns and allowances.57,500$1,035,00050,000Net sales.....Cost of goods sold.Gross profit.....Selling expensesAdministrative expenses.Total operating expenses$900,000625,000500,000$ 410,000$ 153,600$400,000$120,00097,600$ 251,200$ 158,80015,00080,000$200,000$200,00010,000Income from operationsOther income ..Income before income tax$ 173,800$210,000Income tax expense23,000$ 150,80020,000Net income.$190,000

The income statement of two years is compared to know financial performance.

Answered: For 2014, Lindell Company reported its…

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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For 2014, Lindell Company reported its most significant decline in net income in years. At the end of the year, H. Finn, the president, is presented with the following condensed comparative income statement:

Instructions
1. Prepare a comparative income statement with horizontal analysis for the two-year period, using 2013 as the base year. Round to one decimal place.
2. To the extent the data permit, comment on the significant relationships revealed by the horizontal analysis prepared in(1).

Lindell Company
Comparative Income Statement
For the Years Ended December 31, 2014 and 2013
2014
2013
Sales
$1,092,500
$950,000
Sales returns and allowances.
57,500
$1,035,000
50,000
Net sales.....
Cost of goods sold.
Gross profit.....
Selling expenses
Administrative expenses.
Total operating expenses
$900,000
625,000
500,000
$ 410,000
$ 153,600
$400,000
$120,000
97,600
$ 251,200
$ 158,800
15,000
80,000
$200,000
$200,000
10,000
Income from operations
Other income ..
Income before income tax
$ 173,800
$210,000
Income tax expense
23,000
$ 150,800
20,000
Net income.
$190,000

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