Vertical Analysis: Vertical Analysis is used to analyses the % of items in statement for a particular period as the % of total amount. Vertical Analysis is done for particular period for different items. For example analysis of % of assets as % of Total assets for a particular year is done using the Vertical analysis. Requirement-a: To Prepare: A comparative income statement using Vertical analysis

Question

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Answer 1

Question

Chapter 9, Problem 9.1E

To determine

Concept Introduction:

Vertical Analysis:

Vertical Analysis is used to analyses the % of items in statement for a particular period as the % of total amount. Vertical Analysis is done for particular period for different items. For example analysis of % of assets as % of Total assets for a particular year is done using the Vertical analysis.

Requirement-a:

To Prepare:

A comparative income statement using Vertical analysis

Expert Solution

Answer to Problem 9.1E

A comparative income statement using Vertical analysis is as follows:

Comparative income statement using Vertical analysis
	20Y8		20Y8
	$	Common Size %	$	Common Size %
Sales	$ 900,000	100.0%	$ 725,000	100.0%
Cost of Goods sold	$(558,000)	-62.0%	$(435,000)	-60.0%
Gross Profit	$ 342,000	38.0%	$ 290,000	40.0%
Selling expenses	$(117,000)	-13.0%	$(116,000)	-16.0%
Administrative expenses	$ (63,000)	-7.0%	$ (63,250)	-8.7%
Income Tax Expense	$ (76,500)	-8.5%	$ (58,000)	-8.0%
Net Income	$ 85,500	9.5%	$ 52,750	7.3%

Explanation of Solution

A comparative income statement using Vertical analysis is prepared as follows:

Comparative income statement using Vertical analysis
	20Y8		20Y8
	$	Common Size %	$	Common Size %
	A	B = A / Sales	C	D = C / Sales
Sales	$ 900,000	100.0%	$ 725,000	100.0%
Cost of Goods sold	$(558,000)	-62.0%	$(435,000)	-60.0%
Gross Profit	$ 342,000	38.0%	$ 290,000	40.0%
Selling expenses	$(117,000)	-13.0%	$(116,000)	-16.0%
Administrative expenses	$ (63,000)	-7.0%	$ (63,250)	-8.7%
Income Tax Expense	$ (76,500)	-8.5%	$ (58,000)	-8.0%
Net Income	$ 85,500	9.5%	$ 52,750	7.3%

To determine

Concept Introduction:

Vertical Analysis:

Vertical Analysis is used to analyses the % of items in statement for a particular period as the % of total amount. Vertical Analysis is done for particular period for different items. For example analysis of % of assets as % of Total assets for a particular year is done using the Vertical analysis.

Requirement-a:

To Indicate:

Significant changes shown by the comparative income statement

Expert Solution

Answer to Problem 9.1E

Significant changes shown by the comparative income statement are as follows:

Cost of goods sold % has increased in the year 20Y8 as compared with the year 20Y7
Selling expenses % has reduced in the year 20Y8 as compared with the year 20Y7
Income Tax Expense % has increased in the year 20Y8 as compared with the year 20Y7

Explanation of Solution

A comparative income statement using Vertical analysis is prepared as follows:

Comparative income statement using Vertical analysis
	20Y8		20Y8
	$	Common Size %	$	Common Size %
	A	B = A / Sales	C	D = C / Sales
Sales	$ 900,000	100.0%	$ 725,000	100.0%
Cost of Goods sold	$(558,000)	-62.0%	$(435,000)	-60.0%
Gross Profit	$ 342,000	38.0%	$ 290,000	40.0%
Selling Expense	$(117,000)	-13.0%	$(116,000)	-16.0%
Administrative expenses	$ (63,000)	-7.0%	$ (63,250)	-8.7%
Income Tax Expense	$ (76,500)	-8.5%	$ (58,000)	-8.0%
Net Income	$ 85,500	9.5%	$ 52,750	7.3%

Significant changes shown by the comparative income statement are as follows:

Cost of goods sold % has increased in the year 20Y8 as compared with the year 20Y7
Selling expenses % has reduced in the year 20Y8 as compared with the year 20Y7
Income Tax Expense % has increased in the year 20Y8 as compared with the year 20Y7

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METLOCK COMPANY Comparative Balance Sheet Assets Dec. 31, 2025 Dec. 31, 2024 Cash $33,900 $12,500 Accounts receivable 17,500 14,500 Inventory Prepaid insurance Stock investments 26,400 19,200 8,500 10,000 -0- 15,700 Equipment Accumulated depreciation-equipment Total assets 88,000 44,000 (15,500) (14,800) $158,800 $101,100 Liabilities and Stockholders' Equity Accounts payable $34,700 $7,900 Bonds payable 37,000 49,400 Common stock 40,400 24,300 Retained earnings 46,700 19,500 Total liabilities and stockholder's equity $158,800 $101,100 Additional information: 1 Net income for the year ending December 31, 2025 was $36,000. 2 Cash dividends of $8,800 were declared and paid during the year. 3. Stock investments that had a book value of $15,700 were sold for $12,000. 4. Sales for 2025 are $150,000. Prepare a statement of cash flows for the year ended December 31, 2025 using the indirect method. (Show amounts that decrease cash flow with either a-sign eg-15,000 or in parenthesise.g.…

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Financial accounting

Answer 2

Question

Chapter 9, Problem 9.1E

To determine

Concept Introduction:

Vertical Analysis:

Vertical Analysis is used to analyses the % of items in statement for a particular period as the % of total amount. Vertical Analysis is done for particular period for different items. For example analysis of % of assets as % of Total assets for a particular year is done using the Vertical analysis.

Requirement-a:

To Prepare:

A comparative income statement using Vertical analysis

Expert Solution

Answer to Problem 9.1E

A comparative income statement using Vertical analysis is as follows:

Comparative income statement using Vertical analysis
	20Y8		20Y8
	$	Common Size %	$	Common Size %
Sales	$ 900,000	100.0%	$ 725,000	100.0%
Cost of Goods sold	$(558,000)	-62.0%	$(435,000)	-60.0%
Gross Profit	$ 342,000	38.0%	$ 290,000	40.0%
Selling expenses	$(117,000)	-13.0%	$(116,000)	-16.0%
Administrative expenses	$ (63,000)	-7.0%	$ (63,250)	-8.7%
Income Tax Expense	$ (76,500)	-8.5%	$ (58,000)	-8.0%
Net Income	$ 85,500	9.5%	$ 52,750	7.3%

Explanation of Solution

A comparative income statement using Vertical analysis is prepared as follows:

Comparative income statement using Vertical analysis
	20Y8		20Y8
	$	Common Size %	$	Common Size %
	A	B = A / Sales	C	D = C / Sales
Sales	$ 900,000	100.0%	$ 725,000	100.0%
Cost of Goods sold	$(558,000)	-62.0%	$(435,000)	-60.0%
Gross Profit	$ 342,000	38.0%	$ 290,000	40.0%
Selling expenses	$(117,000)	-13.0%	$(116,000)	-16.0%
Administrative expenses	$ (63,000)	-7.0%	$ (63,250)	-8.7%
Income Tax Expense	$ (76,500)	-8.5%	$ (58,000)	-8.0%
Net Income	$ 85,500	9.5%	$ 52,750	7.3%

To determine

Concept Introduction:

Vertical Analysis:

Vertical Analysis is used to analyses the % of items in statement for a particular period as the % of total amount. Vertical Analysis is done for particular period for different items. For example analysis of % of assets as % of Total assets for a particular year is done using the Vertical analysis.

Requirement-a:

To Indicate:

Significant changes shown by the comparative income statement

Expert Solution

Answer to Problem 9.1E

Significant changes shown by the comparative income statement are as follows:

Cost of goods sold % has increased in the year 20Y8 as compared with the year 20Y7
Selling expenses % has reduced in the year 20Y8 as compared with the year 20Y7
Income Tax Expense % has increased in the year 20Y8 as compared with the year 20Y7

Explanation of Solution

A comparative income statement using Vertical analysis is prepared as follows:

Comparative income statement using Vertical analysis
	20Y8		20Y8
	$	Common Size %	$	Common Size %
	A	B = A / Sales	C	D = C / Sales
Sales	$ 900,000	100.0%	$ 725,000	100.0%
Cost of Goods sold	$(558,000)	-62.0%	$(435,000)	-60.0%
Gross Profit	$ 342,000	38.0%	$ 290,000	40.0%
Selling Expense	$(117,000)	-13.0%	$(116,000)	-16.0%
Administrative expenses	$ (63,000)	-7.0%	$ (63,250)	-8.7%
Income Tax Expense	$ (76,500)	-8.5%	$ (58,000)	-8.0%
Net Income	$ 85,500	9.5%	$ 52,750	7.3%

Significant changes shown by the comparative income statement are as follows:

Cost of goods sold % has increased in the year 20Y8 as compared with the year 20Y7
Selling expenses % has reduced in the year 20Y8 as compared with the year 20Y7
Income Tax Expense % has increased in the year 20Y8 as compared with the year 20Y7

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Answer 3

Question

Chapter 9, Problem 9.1E

To determine

Concept Introduction:

Vertical Analysis:

Vertical Analysis is used to analyses the % of items in statement for a particular period as the % of total amount. Vertical Analysis is done for particular period for different items. For example analysis of % of assets as % of Total assets for a particular year is done using the Vertical analysis.

Requirement-a:

To Prepare:

A comparative income statement using Vertical analysis

Expert Solution

Answer to Problem 9.1E

A comparative income statement using Vertical analysis is as follows:

Comparative income statement using Vertical analysis
	20Y8		20Y8
	$	Common Size %	$	Common Size %
Sales	$ 900,000	100.0%	$ 725,000	100.0%
Cost of Goods sold	$(558,000)	-62.0%	$(435,000)	-60.0%
Gross Profit	$ 342,000	38.0%	$ 290,000	40.0%
Selling expenses	$(117,000)	-13.0%	$(116,000)	-16.0%
Administrative expenses	$ (63,000)	-7.0%	$ (63,250)	-8.7%
Income Tax Expense	$ (76,500)	-8.5%	$ (58,000)	-8.0%
Net Income	$ 85,500	9.5%	$ 52,750	7.3%

Explanation of Solution

A comparative income statement using Vertical analysis is prepared as follows:

Comparative income statement using Vertical analysis
	20Y8		20Y8
	$	Common Size %	$	Common Size %
	A	B = A / Sales	C	D = C / Sales
Sales	$ 900,000	100.0%	$ 725,000	100.0%
Cost of Goods sold	$(558,000)	-62.0%	$(435,000)	-60.0%
Gross Profit	$ 342,000	38.0%	$ 290,000	40.0%
Selling expenses	$(117,000)	-13.0%	$(116,000)	-16.0%
Administrative expenses	$ (63,000)	-7.0%	$ (63,250)	-8.7%
Income Tax Expense	$ (76,500)	-8.5%	$ (58,000)	-8.0%
Net Income	$ 85,500	9.5%	$ 52,750	7.3%

To determine

Concept Introduction:

Vertical Analysis:

Vertical Analysis is used to analyses the % of items in statement for a particular period as the % of total amount. Vertical Analysis is done for particular period for different items. For example analysis of % of assets as % of Total assets for a particular year is done using the Vertical analysis.

Requirement-a:

To Indicate:

Significant changes shown by the comparative income statement

Expert Solution

Answer to Problem 9.1E

Significant changes shown by the comparative income statement are as follows:

Cost of goods sold % has increased in the year 20Y8 as compared with the year 20Y7
Selling expenses % has reduced in the year 20Y8 as compared with the year 20Y7
Income Tax Expense % has increased in the year 20Y8 as compared with the year 20Y7

Explanation of Solution

A comparative income statement using Vertical analysis is prepared as follows:

Comparative income statement using Vertical analysis
	20Y8		20Y8
	$	Common Size %	$	Common Size %
	A	B = A / Sales	C	D = C / Sales
Sales	$ 900,000	100.0%	$ 725,000	100.0%
Cost of Goods sold	$(558,000)	-62.0%	$(435,000)	-60.0%
Gross Profit	$ 342,000	38.0%	$ 290,000	40.0%
Selling Expense	$(117,000)	-13.0%	$(116,000)	-16.0%
Administrative expenses	$ (63,000)	-7.0%	$ (63,250)	-8.7%
Income Tax Expense	$ (76,500)	-8.5%	$ (58,000)	-8.0%
Net Income	$ 85,500	9.5%	$ 52,750	7.3%

Significant changes shown by the comparative income statement are as follows:

Cost of goods sold % has increased in the year 20Y8 as compared with the year 20Y7
Selling expenses % has reduced in the year 20Y8 as compared with the year 20Y7
Income Tax Expense % has increased in the year 20Y8 as compared with the year 20Y7

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Answer 4

Question

Chapter 9, Problem 9.1E

To determine

Concept Introduction:

Vertical Analysis:

Vertical Analysis is used to analyses the % of items in statement for a particular period as the % of total amount. Vertical Analysis is done for particular period for different items. For example analysis of % of assets as % of Total assets for a particular year is done using the Vertical analysis.

Requirement-a:

To Prepare:

A comparative income statement using Vertical analysis

Expert Solution

Answer to Problem 9.1E

A comparative income statement using Vertical analysis is as follows:

Comparative income statement using Vertical analysis
	20Y8		20Y8
	$	Common Size %	$	Common Size %
Sales	$ 900,000	100.0%	$ 725,000	100.0%
Cost of Goods sold	$(558,000)	-62.0%	$(435,000)	-60.0%
Gross Profit	$ 342,000	38.0%	$ 290,000	40.0%
Selling expenses	$(117,000)	-13.0%	$(116,000)	-16.0%
Administrative expenses	$ (63,000)	-7.0%	$ (63,250)	-8.7%
Income Tax Expense	$ (76,500)	-8.5%	$ (58,000)	-8.0%
Net Income	$ 85,500	9.5%	$ 52,750	7.3%

Explanation of Solution

A comparative income statement using Vertical analysis is prepared as follows:

Comparative income statement using Vertical analysis
	20Y8		20Y8
	$	Common Size %	$	Common Size %
	A	B = A / Sales	C	D = C / Sales
Sales	$ 900,000	100.0%	$ 725,000	100.0%
Cost of Goods sold	$(558,000)	-62.0%	$(435,000)	-60.0%
Gross Profit	$ 342,000	38.0%	$ 290,000	40.0%
Selling expenses	$(117,000)	-13.0%	$(116,000)	-16.0%
Administrative expenses	$ (63,000)	-7.0%	$ (63,250)	-8.7%
Income Tax Expense	$ (76,500)	-8.5%	$ (58,000)	-8.0%
Net Income	$ 85,500	9.5%	$ 52,750	7.3%

To determine

Concept Introduction:

Vertical Analysis:

Vertical Analysis is used to analyses the % of items in statement for a particular period as the % of total amount. Vertical Analysis is done for particular period for different items. For example analysis of % of assets as % of Total assets for a particular year is done using the Vertical analysis.

Requirement-a:

To Indicate:

Significant changes shown by the comparative income statement

Expert Solution

Answer to Problem 9.1E

Significant changes shown by the comparative income statement are as follows:

Cost of goods sold % has increased in the year 20Y8 as compared with the year 20Y7
Selling expenses % has reduced in the year 20Y8 as compared with the year 20Y7
Income Tax Expense % has increased in the year 20Y8 as compared with the year 20Y7

Explanation of Solution

A comparative income statement using Vertical analysis is prepared as follows:

Comparative income statement using Vertical analysis
	20Y8		20Y8
	$	Common Size %	$	Common Size %
	A	B = A / Sales	C	D = C / Sales
Sales	$ 900,000	100.0%	$ 725,000	100.0%
Cost of Goods sold	$(558,000)	-62.0%	$(435,000)	-60.0%
Gross Profit	$ 342,000	38.0%	$ 290,000	40.0%
Selling Expense	$(117,000)	-13.0%	$(116,000)	-16.0%
Administrative expenses	$ (63,000)	-7.0%	$ (63,250)	-8.7%
Income Tax Expense	$ (76,500)	-8.5%	$ (58,000)	-8.0%
Net Income	$ 85,500	9.5%	$ 52,750	7.3%

Significant changes shown by the comparative income statement are as follows:

Cost of goods sold % has increased in the year 20Y8 as compared with the year 20Y7
Selling expenses % has reduced in the year 20Y8 as compared with the year 20Y7
Income Tax Expense % has increased in the year 20Y8 as compared with the year 20Y7

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Answer 5

Chapter 9, Problem 9.1E

To determine

Concept Introduction:

Vertical Analysis:

Vertical Analysis is used to analyses the % of items in statement for a particular period as the % of total amount. Vertical Analysis is done for particular period for different items. For example analysis of % of assets as % of Total assets for a particular year is done using the Vertical analysis.

Requirement-a:

To Prepare:

A comparative income statement using Vertical analysis

Expert Solution

Answer to Problem 9.1E

A comparative income statement using Vertical analysis is as follows:

Comparative income statement using Vertical analysis
	20Y8		20Y8
	$	Common Size %	$	Common Size %
Sales	$ 900,000	100.0%	$ 725,000	100.0%
Cost of Goods sold	$(558,000)	-62.0%	$(435,000)	-60.0%
Gross Profit	$ 342,000	38.0%	$ 290,000	40.0%
Selling expenses	$(117,000)	-13.0%	$(116,000)	-16.0%
Administrative expenses	$ (63,000)	-7.0%	$ (63,250)	-8.7%
Income Tax Expense	$ (76,500)	-8.5%	$ (58,000)	-8.0%
Net Income	$ 85,500	9.5%	$ 52,750	7.3%

Explanation of Solution

A comparative income statement using Vertical analysis is prepared as follows:

Comparative income statement using Vertical analysis
	20Y8		20Y8
	$	Common Size %	$	Common Size %
	A	B = A / Sales	C	D = C / Sales
Sales	$ 900,000	100.0%	$ 725,000	100.0%
Cost of Goods sold	$(558,000)	-62.0%	$(435,000)	-60.0%
Gross Profit	$ 342,000	38.0%	$ 290,000	40.0%
Selling expenses	$(117,000)	-13.0%	$(116,000)	-16.0%
Administrative expenses	$ (63,000)	-7.0%	$ (63,250)	-8.7%
Income Tax Expense	$ (76,500)	-8.5%	$ (58,000)	-8.0%
Net Income	$ 85,500	9.5%	$ 52,750	7.3%

To determine

Concept Introduction:

Vertical Analysis:

Vertical Analysis is used to analyses the % of items in statement for a particular period as the % of total amount. Vertical Analysis is done for particular period for different items. For example analysis of % of assets as % of Total assets for a particular year is done using the Vertical analysis.

Requirement-a:

To Indicate:

Significant changes shown by the comparative income statement

Expert Solution

Answer to Problem 9.1E

Significant changes shown by the comparative income statement are as follows:

Cost of goods sold % has increased in the year 20Y8 as compared with the year 20Y7
Selling expenses % has reduced in the year 20Y8 as compared with the year 20Y7
Income Tax Expense % has increased in the year 20Y8 as compared with the year 20Y7

Explanation of Solution

A comparative income statement using Vertical analysis is prepared as follows:

Comparative income statement using Vertical analysis
	20Y8		20Y8
	$	Common Size %	$	Common Size %
	A	B = A / Sales	C	D = C / Sales
Sales	$ 900,000	100.0%	$ 725,000	100.0%
Cost of Goods sold	$(558,000)	-62.0%	$(435,000)	-60.0%
Gross Profit	$ 342,000	38.0%	$ 290,000	40.0%
Selling Expense	$(117,000)	-13.0%	$(116,000)	-16.0%
Administrative expenses	$ (63,000)	-7.0%	$ (63,250)	-8.7%
Income Tax Expense	$ (76,500)	-8.5%	$ (58,000)	-8.0%
Net Income	$ 85,500	9.5%	$ 52,750	7.3%

Significant changes shown by the comparative income statement are as follows:

Cost of goods sold % has increased in the year 20Y8 as compared with the year 20Y7
Selling expenses % has reduced in the year 20Y8 as compared with the year 20Y7
Income Tax Expense % has increased in the year 20Y8 as compared with the year 20Y7

Answer 6

Chapter 9, Problem 9.1E

To determine

Concept Introduction:

Vertical Analysis:

Vertical Analysis is used to analyses the % of items in statement for a particular period as the % of total amount. Vertical Analysis is done for particular period for different items. For example analysis of % of assets as % of Total assets for a particular year is done using the Vertical analysis.

Requirement-a:

To Prepare:

A comparative income statement using Vertical analysis

Expert Solution

Answer to Problem 9.1E

A comparative income statement using Vertical analysis is as follows:

Comparative income statement using Vertical analysis
	20Y8		20Y8
	$	Common Size %	$	Common Size %
Sales	$ 900,000	100.0%	$ 725,000	100.0%
Cost of Goods sold	$(558,000)	-62.0%	$(435,000)	-60.0%
Gross Profit	$ 342,000	38.0%	$ 290,000	40.0%
Selling expenses	$(117,000)	-13.0%	$(116,000)	-16.0%
Administrative expenses	$ (63,000)	-7.0%	$ (63,250)	-8.7%
Income Tax Expense	$ (76,500)	-8.5%	$ (58,000)	-8.0%
Net Income	$ 85,500	9.5%	$ 52,750	7.3%

Explanation of Solution

A comparative income statement using Vertical analysis is prepared as follows:

Comparative income statement using Vertical analysis
	20Y8		20Y8
	$	Common Size %	$	Common Size %
	A	B = A / Sales	C	D = C / Sales
Sales	$ 900,000	100.0%	$ 725,000	100.0%
Cost of Goods sold	$(558,000)	-62.0%	$(435,000)	-60.0%
Gross Profit	$ 342,000	38.0%	$ 290,000	40.0%
Selling expenses	$(117,000)	-13.0%	$(116,000)	-16.0%
Administrative expenses	$ (63,000)	-7.0%	$ (63,250)	-8.7%
Income Tax Expense	$ (76,500)	-8.5%	$ (58,000)	-8.0%
Net Income	$ 85,500	9.5%	$ 52,750	7.3%

Answer 7

Chapter 9, Problem 9.1E

To determine

Concept Introduction:

Vertical Analysis:

Vertical Analysis is used to analyses the % of items in statement for a particular period as the % of total amount. Vertical Analysis is done for particular period for different items. For example analysis of % of assets as % of Total assets for a particular year is done using the Vertical analysis.

Requirement-a:

To Prepare:

A comparative income statement using Vertical analysis

Answer 8

Expert Solution

Answer to Problem 9.1E

A comparative income statement using Vertical analysis is as follows:

Comparative income statement using Vertical analysis
	20Y8		20Y8
	$	Common Size %	$	Common Size %
Sales	$ 900,000	100.0%	$ 725,000	100.0%
Cost of Goods sold	$(558,000)	-62.0%	$(435,000)	-60.0%
Gross Profit	$ 342,000	38.0%	$ 290,000	40.0%
Selling expenses	$(117,000)	-13.0%	$(116,000)	-16.0%
Administrative expenses	$ (63,000)	-7.0%	$ (63,250)	-8.7%
Income Tax Expense	$ (76,500)	-8.5%	$ (58,000)	-8.0%
Net Income	$ 85,500	9.5%	$ 52,750	7.3%

Answer 9

Expert Solution

Answer 10

Expert Solution

Answer 11

Expert Solution

Answer 12

Explanation of Solution

A comparative income statement using Vertical analysis is prepared as follows:

Comparative income statement using Vertical analysis
	20Y8		20Y8
	$	Common Size %	$	Common Size %
	A	B = A / Sales	C	D = C / Sales
Sales	$ 900,000	100.0%	$ 725,000	100.0%
Cost of Goods sold	$(558,000)	-62.0%	$(435,000)	-60.0%
Gross Profit	$ 342,000	38.0%	$ 290,000	40.0%
Selling expenses	$(117,000)	-13.0%	$(116,000)	-16.0%
Administrative expenses	$ (63,000)	-7.0%	$ (63,250)	-8.7%
Income Tax Expense	$ (76,500)	-8.5%	$ (58,000)	-8.0%
Net Income	$ 85,500	9.5%	$ 52,750	7.3%

Answer 13

To determine

Concept Introduction:

Vertical Analysis:

Vertical Analysis is used to analyses the % of items in statement for a particular period as the % of total amount. Vertical Analysis is done for particular period for different items. For example analysis of % of assets as % of Total assets for a particular year is done using the Vertical analysis.

Requirement-a:

To Indicate:

Significant changes shown by the comparative income statement

Expert Solution

Answer to Problem 9.1E

Significant changes shown by the comparative income statement are as follows:

Cost of goods sold % has increased in the year 20Y8 as compared with the year 20Y7
Selling expenses % has reduced in the year 20Y8 as compared with the year 20Y7
Income Tax Expense % has increased in the year 20Y8 as compared with the year 20Y7

Explanation of Solution

A comparative income statement using Vertical analysis is prepared as follows:

Comparative income statement using Vertical analysis
	20Y8		20Y8
	$	Common Size %	$	Common Size %
	A	B = A / Sales	C	D = C / Sales
Sales	$ 900,000	100.0%	$ 725,000	100.0%
Cost of Goods sold	$(558,000)	-62.0%	$(435,000)	-60.0%
Gross Profit	$ 342,000	38.0%	$ 290,000	40.0%
Selling Expense	$(117,000)	-13.0%	$(116,000)	-16.0%
Administrative expenses	$ (63,000)	-7.0%	$ (63,250)	-8.7%
Income Tax Expense	$ (76,500)	-8.5%	$ (58,000)	-8.0%
Net Income	$ 85,500	9.5%	$ 52,750	7.3%

Significant changes shown by the comparative income statement are as follows:

Cost of goods sold % has increased in the year 20Y8 as compared with the year 20Y7
Selling expenses % has reduced in the year 20Y8 as compared with the year 20Y7
Income Tax Expense % has increased in the year 20Y8 as compared with the year 20Y7

Answer 14

To determine

Concept Introduction:

Vertical Analysis:

Vertical Analysis is used to analyses the % of items in statement for a particular period as the % of total amount. Vertical Analysis is done for particular period for different items. For example analysis of % of assets as % of Total assets for a particular year is done using the Vertical analysis.

Requirement-a:

To Indicate:

Significant changes shown by the comparative income statement

Answer 15

Expert Solution

Answer to Problem 9.1E

Significant changes shown by the comparative income statement are as follows:

Cost of goods sold % has increased in the year 20Y8 as compared with the year 20Y7
Selling expenses % has reduced in the year 20Y8 as compared with the year 20Y7
Income Tax Expense % has increased in the year 20Y8 as compared with the year 20Y7

Answer 16

Expert Solution

Answer 17

Expert Solution

Answer 18

Expert Solution

Answer 19

Explanation of Solution

A comparative income statement using Vertical analysis is prepared as follows:

Comparative income statement using Vertical analysis
	20Y8		20Y8
	$	Common Size %	$	Common Size %
	A	B = A / Sales	C	D = C / Sales
Sales	$ 900,000	100.0%	$ 725,000	100.0%
Cost of Goods sold	$(558,000)	-62.0%	$(435,000)	-60.0%
Gross Profit	$ 342,000	38.0%	$ 290,000	40.0%
Selling Expense	$(117,000)	-13.0%	$(116,000)	-16.0%
Administrative expenses	$ (63,000)	-7.0%	$ (63,250)	-8.7%
Income Tax Expense	$ (76,500)	-8.5%	$ (58,000)	-8.0%
Net Income	$ 85,500	9.5%	$ 52,750	7.3%

Significant changes shown by the comparative income statement are as follows:

Cost of goods sold % has increased in the year 20Y8 as compared with the year 20Y7
Selling expenses % has reduced in the year 20Y8 as compared with the year 20Y7
Income Tax Expense % has increased in the year 20Y8 as compared with the year 20Y7

Answer 20

Ch. 9 - What type of analysis is indicated by the...Ch. 9 - Which of the following measures indicates the...Ch. 9 - Prob. 3SEQ Ch. 9 - Prob. 4SEQ Ch. 9 - Prob. 5SEQ Ch. 9 - That is the difference between horizontal and...Ch. 9 - Prob. 2CDQ Ch. 9 - Prob. 3CDQ Ch. 9 - Prob. 4CDQ Ch. 9 - How would the current and quick ratios of a...

Answer to Problem 9.1E

Explanation of Solution

Answer to Problem 9.1E

Explanation of Solution

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