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

Want to see more full solutions like this?

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

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Students have asked these similar questions

Required information [The following information applies to the questions displayed below.] Kitimat Company manufactures winter hats that sell for $42 per unit. The following information pertains to the company's first year of operations in which it produced 40,100 units and sold 37,600 units. Variable costs per unit: Manufacturing: Direct materials Direct labour Variable manufacturing overhead Variable selling and administrative Fixed costs per year: Fixed manufacturing overhead Fixed selling and administrative expenses $ 16 LA LA LA LA $ $ 6612 $401,000 $247,000 4. What is the company's operating income under variable costing?

Do fast answer of this general accounting question

Using the high-low method, estimate a cost formula for power cost. ??

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

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

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

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

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

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

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

Want to see more full solutions like this?

Chapter 9 Solutions