Vertical Analysis Vertical analysis is prepared to analyze the relationship among various financial statements with a particular base amount. Formula: Vertical analysis percentage = ( Specific item Base amount ) × 100 This analysis is otherwise called as common-size statement. To prepare: Comparative income statement for the two-year period. Given info: Income statement for the two year period.

Question

Vertical Analysis of Income Statement For 20Y2, Tri-Comic Company initiated a sales promotion campaign that included the expenditure of an additional $21,000 for advertising. At the end of the year, Lumi Neer, the president, is presented with the following condensed comparative income statement: Tri-Comic CompanyComparative Income StatementFor the Years Ended December 31, 20Y2 and 20Y1 20Y2 20Y1 Sales $741,000 $637,000 Cost of merchandise sold 348,270 337,610 Gross profit $392,730 $299,390 Selling expenses $148,200 $121,030 Administrative expenses 74,100 76,440 Total operating expenses $222,300 $197,470 Income from operations $170,430 $101,920 Other revenue 29,640 31,850 Income before income tax expense $200,070 $133,770 Income tax expense 81,510 50,960 Net income $118,560 $82,810 Required: Question Content Area 1. Prepare a comparative income statement for the two-year period, presenting an analysis of each item in…

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Question

Chapter 17, Problem 17.2APR

1)

To determine

Vertical Analysis

Vertical analysis is prepared to analyze the relationship among various financial statements with a particular base amount.

Formula:

Vertical analysis percentage =(Specific itemBase amount)×100

This analysis is otherwise called as common-size statement.

To prepare: Comparative income statement for the two-year period.

Given info: Income statement for the two year period.

2)

To determine

To comment: Significant relationships revealed by the horizontal analysis.

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Vertical Analysis of Income Statement For 20Y2, Tri-Comic Company initiated a sales promotion campaign that included the expenditure of an additional $21,000 for advertising. At the end of the year, Lumi Neer, the president, is presented with the following condensed comparative income statement: Tri-Comic CompanyComparative Income StatementFor the Years Ended December 31, 20Y2 and 20Y1 20Y2 20Y1 Sales $741,000 $637,000 Cost of merchandise sold 348,270 337,610 Gross profit $392,730 $299,390 Selling expenses $148,200 $121,030 Administrative expenses 74,100 76,440 Total operating expenses $222,300 $197,470 Income from operations $170,430 $101,920 Other revenue 29,640 31,850 Income before income tax expense $200,070 $133,770 Income tax expense 81,510 50,960 Net income $118,560 $82,810 Required: Question Content Area 1. Prepare a comparative income statement for the two-year period, presenting an analysis of each item in…

Vertical analysis of income statement For 20Y2, Tri-Comic Company initiated a sales promotion campaign that included the expenditure of an additional $50,000 for advertising. At the end of the year, Lumi Neer, the president, is presented with the following condensed comparative income statement: Tri-Comic Company Comparative Income Statement For the Years Ended December 31, 20Y2 and 20Y1 20Y2 20Y1 Sales $ 1,500,000 $ 1,250,000 Cost of goods sold (510,000) (475,000) Gross profit $ 990,000 $ 775,000 Selling expenses $ (270,000) $ (200,000) Administrative expenses (180,000) (156,250) Total operating expenses $ (450,000) $ (356,250) Operating income $ 540,000 $ 418,750 Other revenue 60,000 50,000 Income before income tax expense $ 600,000 $ 468,750 Income tax expense (450,000) (375,000) Net income $ 150,000 $ 93,750 1. Prepare a comparative income statement for the two-year period, presenting an analysis of each item in relationship to sales for…

Vertical analysis of income statement For 20Y2, Tri-Comic Company initiated a sales promotion campaign that included the expenditure of an additional $50,000 for advertising. At the end of the year, Lumi Neer, the president, is presented with the following condensed comparative income statement: REFER IMAGE Instructions1. Prepare a comparative income statement for the two-year period, presenting an analysis of each item in relationship to sales for each of the years. (Round percentages to one decimal place.)2. To the extent the data permit, comment on the significant relationships revealed by the vertical analysis prepared in (1).