For 2014, Kasay Company initiated a sales promotion campaign that included the expenditure of an additional $30,000 for advertising. At the end of the year, Scott Brown, the president, is presented with the following condensed comparative income statement: Instructions1. Prepare a comparative income statement for the two-year period, presenting an analysis of each item in relationship to net sales for each of the years. Round to one decimal place.2. To the extent the data permit, comment on the significant relationships revealed by the vertical analysis prepared in(1). Kasay CompanyComparative Income StatementFor the Years Ended December 31, 2014 and 201320142013SalesSales returns and allowances.$922,500$820,00022,50020,000Net sales....$900,000$800,000Cost of goods sold.Gross profit..Selling expenses360,000340,000$540,000$216,000$460,000$176,000Administrative expenses.Total operating expensesIncome from operationsOther income.81,000$297,000$243,00072,000$248,000$212,00092,000135,000Income before income tax$378,000$304,000Income tax expense270,000$108,000240,000Net income$ 64,000

Income Statement:-It is a statement prepared during the period, it records all expenses and revenue…

Answered: For 2014, Kasay Company initiated a…

Financial Accounting: The Impact on Decision Makers

10th Edition

ISBN:9781305654174

Author:Gary A. Porter, Curtis L. Norton

Publisher:Gary A. Porter, Curtis L. Norton

Chapter5: Inventories And Cost Of Goods Sold

Section: Chapter Questions

Problem 5.26MCE

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For 2014, Kasay Company initiated a sales promotion campaign that included the expenditure of an additional $30,000 for advertising. At the end of the year, Scott Brown, the president, is presented with the following condensed comparative income statement:

Instructions
1. Prepare a comparative income statement for the two-year period, presenting an analysis of each item in relationship to net sales for each of the years. Round to one decimal place.
2. To the extent the data permit, comment on the significant relationships revealed by the vertical analysis prepared in(1).

Kasay Company
Comparative Income Statement
For the Years Ended December 31, 2014 and 2013
2014
2013
Sales
Sales returns and allowances.
$922,500
$820,000
22,500
20,000
Net sales....
$900,000
$800,000
Cost of goods sold.
Gross profit..
Selling expenses
360,000
340,000
$540,000
$216,000
$460,000
$176,000
Administrative expenses.
Total operating expenses
Income from operations
Other income.
81,000
$297,000
$243,000
72,000
$248,000
$212,000
92,000
135,000
Income before income tax
$378,000
$304,000
Income tax expense
270,000
$108,000
240,000
Net income
$ 64,000

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