**Revenue and Expense Data for Bluestem Company:**| Description | Year 2 | Year 1 ||-------------------------------|--------------|------------|| Administrative expenses | $37,000 | $20,000 || Cost of merchandise sold | $350,000 | $320,000 || Income tax expense | $40,000 | $32,000 || Sales | $800,000 | $700,000 || Selling expenses | $150,000 | $110,000 |**Instructions:**a. Prepare a comparative income statement using vertical analysis, expressing each item for both years as a percentage of sales. Round percentages to one decimal place.**Bluestem Company****Comparative Income Statement****For Years Ended December 31, Year 2 and Year 1**| Description | Year 2 Amount | Year 2 Percent | Year 1 Amount | Year 1 Percent ||------------------------------|---------------|----------------|---------------|----------------|| [Line item] | $[Amount] | [Percent]% | $[Amount] | [Percent]% || [Line item] | $[Amount] | [Percent]% | $[Amount] | [Percent]% || [Line item] | $[Amount] | [Percent]% | $[Amount] | [Percent]% || Total operating expenses | $[Amount] | [Percent]% | $[Amount] | [Percent]% || [Line item] | $[Amount] | [Percent]% | $[Amount] | [Percent]% || [Line item] | $[Amount] | [Percent]% | $[Amount] | [Percent]% |b. Complete the following regarding significant changes disclosed by the comparative income statement."The most significant increase in expenses is [Expense Type], which offsets the decrease in [Expense Type], resulting in the overall [Increase/Decrease] of net income."**Note:** Replace placeholders with calculated values when performing the analysis.

All the items will be shown as a percentage of the total sales.Bluestem Company Comparative Income Statement For Years Ended December 31, Year 2 and Year 1 Year 2 Year 2 Year 1 Year 1 Amount Percent Amount Percent Sales $800,000 100.0% $700,000 100.0% Cost of Goods Sold $350,000 43.8% $320,000 45.7% Gross Profits $450,000 56.3% $380,000 54.3% Selling Expense $150,000 18.8% $110,000 15.7% Administrative expenses $37,000 4.6% $20,000 2.9% Total operating expenses $187,000 23.4% $130,000 18.6% Income from Operations $263,000 32.9% $250,000 35.7% Income tax expense $40,000 5.0% $32,000 4.6% Net income $223,000 27.9% $218,000 31.1% The most significant increase in expenses is selling expenses or total operating expenses which offsets the decrease in cost of goods sold resulting in the overall of net income.

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Revenue and expense data for Bluestem Company are as follows: Year 2 Year 1 Administrative expenses $37,000 $20,000 Cost of merchandise sold 350,000 320,000 Income tax expense 40,000 32,000 Sales 800,000 700,000 Selling expenses 150,000 110,000 a. Prepare a comparative income statement, with vertical analysis, stating each item for both years as a percent of sales. Round percentages to one decimal place. Bluestem Company Comparative Income Statement For Years Ended December 31, Year 2 and Year 1 Year 2 Amount Year 2 Percent Year 1 Amount Year 1 Percent Total operating expenses b. Complete the following regarding significant changes disclosed by the comparative income statement. The most significant increase in expenses is which offsets the decrease in resulting in the overall of net income.

Revenue and expense data for Bluestem Company are as follows: Year 2 Year 1 Administrative expenses $37,000 $20,000 Cost of merchandise sold 350,000 320,000 Income tax expense 40,000 32,000 Sales 800,000 700,000 Selling expenses 150,000 110,000 a. Prepare a comparative income statement, with vertical analysis, stating each item for both years as a percent of sales. Round percentages to one decimal place. Bluestem Company Comparative Income Statement For Years Ended December 31, Year 2 and Year 1 Year 2 Amount Year 2 Percent Year 1 Amount Year 1 Percent Total operating expenses b. Complete the following regarding significant changes disclosed by the comparative income statement. The most significant increase in expenses is which offsets the decrease in resulting in the overall of net income.

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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