For 2016, Indigo Company initiated a sales promotion campaign that included the expenditure of an additional $39,000 for advertising. At the end of the year, Lumi Neer, the president, is presented with the following condensed comparative income statement:
Indigo Company Comparative
Income Statement For the Years Ended December 31, 2016 and 2015
1 2016 2015
2 Sales $810,000.00 $500,000.00
3 Cost of goods sold 283,500.00 185,000.00
4 Gross profit $526,500.00 $315,000.00
5 Selling expenses $162,000.00 $90,000.00
6 Administrative expenses 56,700.00 45,000.00
7 Total operating expenses $218,700.00 $135,000.00
8 Income from operations $307,800.00 $180,000.00
9 Other income 72,900.00 45,000.00
10 Income before income tax $380,700.00 $225,000.00
11 Income tax expense 210,600.00 130,000.00
12 Net income $170,100.00 $95,000.00
Required:
1. 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 your percentages to one decimal place. Enter all amounts as positive numbers.
2. To the extent the data permit, comment on the significant relationships revealed by the vertical analysis prepared in (1).
1. Prepare an income statement in comparative form, stating each item for both years as a percent of sales. Round your percentages to one decimal place. Enter all amounts as positive numbers.
Indigo Company
Comparative Income Statement
For the Years Ended December 31, 2016 and 2015
1
2016
2016
2015
2015
2
Amount
Percent
Amount
Percent
3
Sales
$810,000.00
$500,000.00
4
Cost of goods sold
283,500.00
185,000.00
5
Gross profit
$526,500.00
$315,000.00
6
Selling expenses
$162,000.00
$90,000.00
7
Administrative expenses
56,700.00
45,000.00
8
Total operating expenses
$218,700.00
$135,000.00
9
Income from operations
$307,800.00
$180,000.00
10
Other income
72,900.00
45,000.00
11
Income before income tax
$380,700.00
$225,000.00
12
Income tax expense
210,600.00
130,000.00
13
Net income
$170,100.00
$95,000.00
Solution
Indigo Company
Comparative Income Statement
For the Years Ended December 31, 2016 and 2015
1
2016
2016
2015
2015
2
Amount
Percent
Amount
Percent
3
Sales
$810,000.00
$500,000.00
4
Cost of goods sold
283,500.00
185,000.00
5
Gross profit
$526,500.00
$315,000.00
6
Selling expenses
$162,000.00
$90,000.00
7
Administrative expenses
56,700.00
45,000.00
8
Total operating expenses
$218,700.00
$135,000.00
9
Income from operations
$307,800.00
$180,000.00
10
Other income
72,900.00
45,000.00
11
Income before income tax
$380,700.00
$225,000.00
12
Income tax expense
210,600.00
130,000.00
13
Net income
$170,100.00
$95,000.00
Answers: 1
Other questions on the subject: Business
Business, 21.06.2019 21:30, sciencecreation87
Prepare journal entries for each transaction and identify the financial statement impact of each entry. the financial statements are automatically generated based on the journal entries recorded. apr. 1 tanner invested $80,000 cash along with office equipment valued at $26,000 in the company in exchange for common stock. apr. 2 the company prepaid $9,000 cash for 12 months' rent for office space. the company's policy is record prepaid expenses in balance sheet accounts. apr. 3 the company made credit purchases for $8,000 in office equipment and $3,600 in office supplies. payment is due within 10 days. apr. 6 the company completed services for a client and immediately received $4,000 cash. apr. 9 the company completed a $6,000 project for a client, who must pay within 30 days. apr. 13 the company paid $11,600 cash to settle the account payable created on april 3.apr. 19 the company paid $2,400 cash for the premium on a 12-month insurance policy. the company's policy is record prepaid expenses in balance sheet accounts. apr. 22 the company received $4,400 cash as partial payment for the work completed on april 9.apr. 25 the company completed work for another client for $2,890 on credit. apr. 28 the company paid $5,500 cash in dividends. apr. 29 the company purchased $600 of additional office supplies on credit. apr. 30 the company paid $435 cash for this month's utility bill.
Answers: 3
Business, 21.06.2019 22:30, weeblordd
Chip wilson has hired goldman sachs, an investment banking company, to assist him with a hostile takeover of lululemon. wilson's goal is to hire a new board of directors because he believes there is a need for a more long-term focus. goldman sachs is a proven firm at making a profit in every move that they make. if the hostile takeover does not pan out, what could be another motive for investors?
Answers: 1
Business, 22.06.2019 12:30, cheyannehatton
Suppose that two firms produce differentiated products and compete in prices. as in class, the two firms are located at two ends of a line one mile apart. consumers are evenly distributed along the line. the firms have identical marginal cost, $60. firm b produces a product with value $110 to consumers. firm a (located at 0 on the unit line) produces a higher quality product with value $120 to consumers. the cost of travel are directly related to the distance a consumer travels to purchase a good. if a consumerhas to travel a mile to purchase a good, the incur a cost of $20. if they have to travel x fraction of a mile, they incur a cost of $20x. (a) write down the expressions for how much a consumer at location d would value the products sold by firms a and b, if they set prices p_{a} and p_{b} ? (b) based on your expressions in (a), how much will be demanded from each firm if prices p_{a} and p_{b} are set? (c) what are the nash equilibrium prices?
Answers: 3
You know the right answer?
For 2016, Indigo Company initiated a sales promotion campaign that included the expenditure of an ad...
Questions in other subjects:
Biology, 07.11.2020 07:30
Mathematics, 07.11.2020 07:30
Mathematics, 07.11.2020 07:30
Mathematics, 07.11.2020 07:30
History, 07.11.2020 07:30
