Perform both horizontal and vertical analysis for Dominic Retail Enterprise's Comparative Statement. 10. Presented below are the income statements of Dominic Retail Enterprise, a reseller of home decors.• Prepare a common size income statement for both years, 2013 and 2014.Compare the common size statements you have prepared and analyze the key changes thattook place. Dominic Retail EnterpriseIncome StatementsFor the period ended December 3120142013SalesP 1,800,000P 1,500,000Cost of Goods SoldMerchandise Inventory, Beginning80,00025,000750,000PurchasesTotal Goods Available for Sale800,000880,000775,000Merchandise Inventory, Ending(55,000)(80,000)Cost of Goods Sold825,000695,000Gross Profit975,000805,000Operating Expenses(650,000)(520,000)Earnings Before Interest and Taxes325,000285,000Interest Expense(5,000)(5,000)Earnings Before Tax320,000280,000Income Tax Expense(96,000)(84,000)Net IncomeP 224,000P 196,000

Common size Percentage = Amount of individual Item / Amount of base item ×100

Presented below are the income statements of Dominic Retail Enterprise, a reseller of home decors. • Prepare a common size income statement for both years, 2013 and 2014. Compare the common size statements you have prepared and analyze the key changes that took place.

Presented below are the income statements of Dominic Retail Enterprise, a reseller of home decors. • Prepare a common size income statement for both years, 2013 and 2014. Compare the common size statements you have prepared and analyze the key changes that took place.

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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Question

Perform both horizontal and vertical analysis for Dominic Retail Enterprise's Comparative Statement.

10. Presented below are the income statements of Dominic Retail Enterprise, a reseller of home decors.
• Prepare a common size income statement for both years, 2013 and 2014.
Compare the common size statements you have prepared and analyze the key changes that
took place.

Dominic Retail Enterprise
Income Statements
For the period ended December 31
2014
2013
Sales
P 1,800,000
P 1,500,000
Cost of Goods Sold
Merchandise Inventory, Beginning
80,000
25,000
750,000
Purchases
Total Goods Available for Sale
800,000
880,000
775,000
Merchandise Inventory, Ending
(55,000)
(80,000)
Cost of Goods Sold
825,000
695,000
Gross Profit
975,000
805,000
Operating Expenses
(650,000)
(520,000)
Earnings Before Interest and Taxes
325,000
285,000
Interest Expense
(5,000)
(5,000)
Earnings Before Tax
320,000
280,000
Income Tax Expense
(96,000)
(84,000)
Net Income
P 224,000
P 196,000

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