Horizontal Analysis of the Income Statement Income statement data for Winthrop Company for two recent years ended December 31, are as follows: Current Year Previous Year Sales $878,400 $720,000 Cost of goods sold 725,900 610,000 Gross profit $152,500 $110,000 Selling expenses $42,560 $38,000 Administrative expenses 38,400 32,000 Total operating expenses $80,960 $70,000 Income before income tax $71,540 $40,000 Income tax expenses 28,600 16,000 Net income $42,940 $24,000 a. Prepare a comparative income statement with horizontal analysis, indicating the increase (decrease) for the current year when compared with the previous year. If required, round to one decimal place. Winthrop Company Comparative Income Statement For the Years Ended December 31 CurrentyearAmount PreviousyearAmount Increase(Decrease)Amount Increase(Decrease)Percent Sales $878,400 $720,000 $ % Cost of goods sold 725,900 610,000 % Gross profit $152,500 $110,000 $ % Selling expenses $42,560 $38,000 $ % Administrative expenses 38,400 32,000 % Total operating expenses $80,960 $70,000 $ % Income before income tax $71,540 $40,000 $ % Income tax expense 28,600 16,000 % Net income $42,940 $24,000 $ %
Horizontal Analysis of the Income Statement Income statement data for Winthrop Company for two recent years ended December 31, are as follows: Current Year Previous Year Sales $878,400 $720,000 Cost of goods sold 725,900 610,000 Gross profit $152,500 $110,000 Selling expenses $42,560 $38,000 Administrative expenses 38,400 32,000 Total operating expenses $80,960 $70,000 Income before income tax $71,540 $40,000 Income tax expenses 28,600 16,000 Net income $42,940 $24,000 a. Prepare a comparative income statement with horizontal analysis, indicating the increase (decrease) for the current year when compared with the previous year. If required, round to one decimal place. Winthrop Company Comparative Income Statement For the Years Ended December 31 CurrentyearAmount PreviousyearAmount Increase(Decrease)Amount Increase(Decrease)Percent Sales $878,400 $720,000 $ % Cost of goods sold 725,900 610,000 % Gross profit $152,500 $110,000 $ % Selling expenses $42,560 $38,000 $ % Administrative expenses 38,400 32,000 % Total operating expenses $80,960 $70,000 $ % Income before income tax $71,540 $40,000 $ % Income tax expense 28,600 16,000 % Net income $42,940 $24,000 $ %
Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter16: Financial Statement Analysis
Section: Chapter Questions
Problem 2PB
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Horizontal Analysis of the Income Statement
Income statement data for Winthrop Company for two recent years ended December 31, are as follows:
Current Year | Previous Year | ||||
Sales | $878,400 | $720,000 | |||
Cost of goods sold | 725,900 | 610,000 | |||
Gross profit | $152,500 | $110,000 | |||
Selling expenses | $42,560 | $38,000 | |||
Administrative expenses | 38,400 | 32,000 | |||
Total operating expenses | $80,960 | $70,000 | |||
Income before income tax | $71,540 | $40,000 | |||
Income tax expenses | 28,600 | 16,000 | |||
Net income | $42,940 | $24,000 |
a. Prepare a comparative income statement with horizontal analysis, indicating the increase (decrease) for the current year when compared with the previous year. If required, round to one decimal place.
Winthrop Company | ||||
Comparative Income Statement | ||||
For the Years Ended December 31 | ||||
Current year Amount |
Previous year Amount |
Increase (Decrease) Amount |
Increase (Decrease) Percent |
|
Sales | $878,400 | $720,000 | $ | % |
Cost of goods sold | 725,900 | 610,000 | % | |
Gross profit | $152,500 | $110,000 | $ | % |
Selling expenses | $42,560 | $38,000 | $ | % |
Administrative expenses | 38,400 | 32,000 | % | |
Total operating expenses | $80,960 | $70,000 | $ | % |
Income before income tax | $71,540 | $40,000 | $ | % |
Income tax expense | 28,600 | 16,000 | % | |
Net income | $42,940 | $24,000 | $ | % |
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