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).

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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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
Transcribed Image Text: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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