Preparing Common-Size Income Statements by Using Base Period Horizontal Analysis Scherer Company provided the following income statements for its first 3 years of operation: Scherer Company Income Statements Years of Operation Year 1 Year 2 Year 3 Net sales $1,000,000 $1,150,000 $1,310,000 Less: Cost of goods sold (297,000) (321,000) (367,000) Gross margin $703,000 $829,000 $943,000 Less: Operating expenses (426,000) (493,000) (589,500) Income taxes (109,000) (120,800) (134,600) Net income $168,000 $215,200 $218,900 Required: Prepare common-size income statements by using Year 1 as the base period. (Note: Enter all amounts as positive numbers, except for a net loss. Enter net loss as a negative number, if applicable. Round answers to the nearest whole percentage.)
Preparing Common-Size Income Statements by Using Base Period Horizontal Analysis Scherer Company provided the following income statements for its first 3 years of operation: Scherer Company Income Statements Years of Operation Year 1 Year 2 Year 3 Net sales $1,000,000 $1,150,000 $1,310,000 Less: Cost of goods sold (297,000) (321,000) (367,000) Gross margin $703,000 $829,000 $943,000 Less: Operating expenses (426,000) (493,000) (589,500) Income taxes (109,000) (120,800) (134,600) Net income $168,000 $215,200 $218,900 Required: Prepare common-size income statements by using Year 1 as the base period. (Note: Enter all amounts as positive numbers, except for a net loss. Enter net loss as a negative number, if applicable. Round answers to the nearest whole percentage.)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Preparing Common-Size Income Statements by Using Base Period Horizontal Analysis
Scherer Company provided the following income statements for its first 3 years of operation:
| Scherer Company Income Statements Years of Operation |
|||
| Year 1 | Year 2 | Year 3 | |
| Net sales | $1,000,000 | $1,150,000 | $1,310,000 |
| Less: Cost of goods sold | (297,000) | (321,000) | (367,000) |
| Gross margin | $703,000 | $829,000 | $943,000 |
| Less: | |||
| Operating expenses | (426,000) | (493,000) | (589,500) |
| Income taxes | (109,000) | (120,800) | (134,600) |
| Net income | $168,000 | $215,200 | $218,900 |
Required:
Prepare common-size income statements by using Year 1 as the base period. (Note: Enter all amounts as positive numbers, except for a net loss. Enter net loss as a negative number, if applicable. Round answers to the nearest whole percentage.)
| Scherer Company | ||||||
| Common-Size Income Statements | ||||||
| Years of Operation | ||||||
| Year 1 | Year 1 | Year 2 | Year 2 | Year 3 | Year 3 | |
| Dollars | Percentage | Dollars | Percentage | Dollars | Percentage | |
| Net sales | $1,000,000 | fill in the blank 1% | 1,150,000 | fill in the blank 2% | $1,310,000 | fill in the blank 3% |
| Less: Cost of goods sold | (297,000) | fill in the blank 4 | (321,000) | fill in the blank 5 | (367,000) | fill in the blank 6 |
| Gross margin | $703,000 | fill in the blank 7 | $829,000 | fill in the blank 8 | $943,000 | fill in the blank 9 |
| Less: | ||||||
| Operating expenses | (426,000) | fill in the blank 10 | (493,000) | fill in the blank 11 | (589,500) | fill in the blank 12 |
| Income taxes | (109,000) | fill in the blank 13 | (120,800) | fill in the blank 14 | (134,600) | fill in the blank 15 |
| Net income | $168,000 | fill in the blank 16 | $215,200 | fill in the blank 17 | $218,900 | fill in the blank 18 |
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