Chapter 15, Problem 10AT

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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 Jewelers**

**Income Statement**

**For the Year Ended December 31,2013**

**b.** 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 Jewelers**

**Comparative Income Statement**

**For 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

Explanation

**Given Information:**

Jazzline Jewelers gross sales are

**Formula used:**

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

Step

Step

Step

**Calculation:**

Consider gross sales are

Compute the net sales by substituting sales returns and allowances to

Compute percentage of gross sales by substituting gross sales to

And,

Compute cost of goods sold by substituting merchandise inventory to

Compute gross margin by substituting net sales to

And,

**(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

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