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Income statements for Gibson Company for Year 3 and Year 4 follow: GIBSON COMPANY Income Statements Year 4 Year 3 $200,600 143,600 Sales Cost of goods sold Selling expenses Administrative expenses Interest expense Total expenses Income before taxes 21,500 12,500 3,800 $181,400 $180,600 121,600 19,500 14,500 5,800 $161,400 19,200 19,200 3,500 $ 15,700 Income taxes expense 5,000 Net income $ 14,200 Required a. Perform a horizontal analysis, showing the percentage change in each income statement component between Year 3 and Year 4. b. Perform a vertical analysis, showing each income statement component as a percentage of sales for each year.

Income statements for Gibson Company for Year 3 and Year 4 follow: GIBSON COMPANY Income Statements Year 4 Year 3 $200,600 143,600 Sales Cost of goods sold Selling expenses Administrative expenses Interest expense Total expenses Income before taxes 21,500 12,500 3,800 $181,400 $180,600 121,600 19,500 14,500 5,800 $161,400 19,200 19,200 3,500 $ 15,700 Income taxes expense 5,000 Net income $ 14,200 Required a. Perform a horizontal analysis, showing the percentage change in each income statement component between Year 3 and Year 4. b. Perform a vertical analysis, showing each income statement component as a percentage of sales for each year.

FINANCIAL ACCOUNTING
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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Income statements for Gibson Company for Year 3 and Year 4 follow: GIBSON COMPANY Income Statements Year 4 Year 3 $200,600 143,600 Sales $180,600 Cost of goods sold Selling expenses Administrative expenses Interest expense 21,500 12,500 3,800 $181,400 19,200 121,600 19,500 14,500 5,800 $161,400 Total expenses Income before taxes 19,200 3,500 Income taxes expense 5,000 Net income $ 14,200 $ 15,700 Required a. Perform a horizontal analysis, showing the percentage change in each income statement component between Year 3 and Year 4. b. Perform a vertical analysis, showing each income statement component as a percentage of sales for each year.
Transcribed Image Text:Income statements for Gibson Company for Year 3 and Year 4 follow: GIBSON COMPANY Income Statements Year 4 Year 3 $200,600 143,600 Sales $180,600 Cost of goods sold Selling expenses Administrative expenses Interest expense 21,500 12,500 3,800 $181,400 19,200 121,600 19,500 14,500 5,800 $161,400 Total expenses Income before taxes 19,200 3,500 Income taxes expense 5,000 Net income $ 14,200 $ 15,700 Required a. Perform a horizontal analysis, showing the percentage change in each income statement component between Year 3 and Year 4. b. Perform a vertical analysis, showing each income statement component as a percentage of sales for each year.
Perform a vertical analysis, showing each income statement component as a percentage of sales for each year. (Percentages may not add exactly due to rounding. Round your answers to 1 decimal place. (i.e., .234 should be entered as 23.4).) GIBSON COMPANY Vertical Analysis of Income Statements Percentage of Sales Year 4 Percentage of Sales Year 3 Sales Cost of goods sold Selling expenses Administrative expenses nterest expense % % Total expenses ncome before taxes ncome taxes expense Net income % %
Transcribed Image Text:Perform a vertical analysis, showing each income statement component as a percentage of sales for each year. (Percentages may not add exactly due to rounding. Round your answers to 1 decimal place. (i.e., .234 should be entered as 23.4).) GIBSON COMPANY Vertical Analysis of Income Statements Percentage of Sales Year 4 Percentage of Sales Year 3 Sales Cost of goods sold Selling expenses Administrative expenses nterest expense % % Total expenses ncome before taxes ncome taxes expense Net income % %
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