Sports Emporium has two operating segments: sporting goods and sports apparel. The income statement for each operating segment is presented below. SPORTS EMPORIUMIncome StatementFor the year ended December 31, 2021   Sporting Goods Sports Apparel   Amount % Amount % Net sales Cost of goods sold Gross profit Operating expenses Operating income Other income (expense) Income before tax Income tax expense Net income $ 1,800,000 1,040,000 760,000 450,000 310,000 20,000 330,000 80,000 $ 250,000 $ 970,000 440,000 530,000 340,000 190,000 (15,000) 175,000 70,000 $ 105,000 Required:1. Complete the “%” columns to be used in a vertical analysis of Sports Emporium’s two operating segments. Express each amount as a percentage of sales.2. Use vertical analysis to compare the profitability of the two operating segments. Which segment is more profitable?

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Sports Emporium has two operating segments: sporting goods and sports apparel. The income statement for each operating segment is presented below.

SPORTS EMPORIUM
Income Statement
For the year ended December 31, 2021
  Sporting Goods Sports Apparel
  Amount % Amount %

Net sales

Cost of goods sold

Gross profit

Operating expenses

Operating income

Other income (expense)

Income before tax

Income tax expense

Net income

$ 1,800,000

1,040,000

760,000

450,000

310,000

20,000

330,000

80,000

$ 250,000

$ 970,000

440,000

530,000

340,000

190,000

(15,000)

175,000

70,000

$ 105,000

Required:
1. Complete the “%” columns to be used in a vertical analysis of Sports Emporium’s two operating segments. Express each amount as a percentage of sales.
2. Use vertical analysis to compare the profitability of the two operating segments. Which segment is more profitable?

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