   Chapter 15, Problem 10AT ### Contemporary Mathematics for Busin...

8th Edition
Robert Brechner + 1 other
ISBN: 9781305585447

#### Solutions

Chapter
Section ### Contemporary Mathematics for Busin...

8th Edition
Robert Brechner + 1 other
ISBN: 9781305585447
Textbook Problem

# a. Use the following financial information to construct a 2013 income statement with vertical analysis for Jazzline Jewelers: gross sales, $1,243,000; sales returns and allowances,$76,540; sales discounts. $21,300; merchandise inventory. Jan. 1, 2013,$654,410; merchandise inventory. Dec. 31, 2013, $413,200; net purchases.$318,000; freight in. $3,450; salaries,$92,350; rent, $83,100; depreciation.$87,700; utilities. $21,350; advertising.$130,440; insurance. $7,920; miscellaneous expenses.$105,900; and income tax. $18,580.Jazzline JewelersIncome StatementFor the Year Ended December 31,2013b. The following data represent Jazzline's operating results for 2014. Prepare a comparative income statement with horizontal analysis for 2013 and 2014: gross sales.$1,286,500; sales returns and allowances. $78,950; sales discounts.$18,700; merchandise inventory. Jan. 1, 2014, $687,300; merchandise inventory. Dec. 31, 2014,$401,210; net purchases. $325,400; freight in.$3,980; salaries. $99,340; rent,$85,600; depreciation. $81,200; utilities.$21,340; advertising. $124,390; insurance.$8,700; miscellaneous expenses. $101,230; and income tax.$12,650.Jazzline JewelersComparative Income StatementFor the Years Ended December 31, 2013 and 2014

(a)

To determine

To calculate: The vertical analysis of an income statement for Jazzline Jewelers for the year December 31,2013 if gross sales are $1,243,000, sales returns and allowances is$76,540, sales discount is $21,300, merchandise inventory is Jan,1,2013$654,410, merchandise inventory Dec.31,2015 $413,200, net purchases is$318,000, freight in is $3,450, salaries is$92,350, rent is $83,100, depreciation is$87,700, utilities is $21,350, advertising is$130,440, insurance is $7,920, miscellaneous expenses is$105,900 and income tax is $18,580. Explanation Given Information: Jazzline Jewelers gross sales are$1,243,000, sales returns and allowances is $76,540, sales discount is$21,300, merchandise inventory is Jan,1,2013 $654,410, merchandise inventory Dec.31,2015$413,200, net purchases is $318,000, freight in is$3,450, salaries is $92,350, rent is$83,100, depreciation is $87,700, utilities is$21,350, advertising is $130,440, insurance is$7,920, miscellaneous expenses is $105,900 and income tax is$18,580.

Formula used:

Follow the steps to prepare a vertical analysis of an income statement:

Step 1: Use the percentage formula, Rate=Portion÷Base, to determine the rate of each item on the income statement. Net sales items are used as base and each items as portion.

Step 2: Round each answer to the nearest tenth of a percent.

Step 3: Count the percentage of each statement item in a column to the right of the amount.

Calculation:

Consider gross sales are $1,243,000, sales returns and allowances is$76,540, sales discount is $21,300, merchandise inventory is Jan,1,2013$654,410, merchandise inventory Dec.31,2013 $413,200, net purchases is$318,000, freight in is $3,450, salaries is$92,350, rent is $83,100, depreciation is$87,700, utilities is $21,350, advertising is$130,440, insurance is $7,920, miscellaneous expenses is$105,900 and income tax is $18,580. Compute the net sales by substituting sales returns and allowances to$76,540 and sales discount to $21,300 and gross sales to$1,243,000.

Net sales=Gross salesSales returns and allowancessales discounts=1,243,00076,54021,300=$1,145,160 Compute percentage of gross sales by substituting gross sales to$1,243,000 and net sales to $1,145,160 %of Net sales=Gross salesNet sales=$1,243,000$1,145,160=1.085=108.5% And, % of Net sales=Gross salesSales returns and allowances%sales discount%=108.56.71.8=100% Compute cost of goods sold by substituting merchandise inventory to Jan,1,2013$654,410, net purchases to $318,000, freight in to$3,450 and merchandise inventory for Dec.31,2013 to $413,200. Costs of goods sold=654,410+318,000+3,450413,200=975,860413,200=$562,660

% of Costs of goods sold=57.4+27.8+0.336.1=85.336.1=49.2%

Compute gross margin by substituting net sales to $1,145,160 and cost of goods sold to$562,660.

Gross Margin=Net SalesCost of goods sold=1,145,160562,660=$582,500 And, % of Gross Margin=Net Sales%Cost of goods sold%=10049 (b) To determine To calculate: The comparative income sheet with horizontal analysis for Jazzline Jewellers for the year’s 2013 and 2014 if gross sales in 2014 are$1,286,500, sales returns and allowances is $78,950, sales discount is$18,700, merchandise inventory is Jan,1,2014 $687,300, merchandise inventory Dec.31,2014$401,210, net purchases is $325,400, freight in is$3,980, salaries is $99,340, rent is$85,600, depreciation is $81,200, utilities is$21,340, advertising is $124,390, insurance is$8,700, miscellaneous expenses is $101,230 and income tax is$12,650.

### Still sussing out bartleby?

Check out a sample textbook solution.

See a sample solution

#### The Solution to Your Study Problems

Bartleby provides explanations to thousands of textbook problems written by our experts, many with advanced degrees!

Get Started

#### Evaluate the integral. 18x2/3dx

Single Variable Calculus: Early Transcendentals

#### The gradient vector field for is:

Study Guide for Stewart's Multivariable Calculus, 8th

#### Multiply 56423 .

Mathematics For Machine Technology 