Complete the following comparative income statement with horizontal analysis for Timely Watch Company. Inc.
Timely Watch Company, Inc.
Comparative Income Statement
2016 | 2015 | Increase (Decrease) Amount Percent | |
Revenue | |||
Gross Sales | $1,223,000 | $996,500 | |
Less: Sales Returns and Allowances | 121,340 | 99,600 | |
Sales Discounts | 63,120 | 51,237 | |
Net Sales | |||
Cost of Goods Sold | |||
Merchandise Inventory. Jan. 1 | 311,200 | 331,000 | |
Purchases | 603,290 | 271,128 | |
Freight In | 18,640 | 13,400 | |
Goods Available for Sale | |||
Less: Merchandise Inventory. Dec. 31 | 585,400 | 311,200 | |
Cost of Goods Sold | |||
Gross Margin | |||
2016 | 2015 | Increase (Decrease) Amount Percent | |
Operating Expenses | |||
Salaries and Benefits | 215,200 | 121,800 | |
Rent and Utilities | 124,650 | 124,650 | |
Depreciation | 43,500 | 41,230 | |
Insurance | 24,970 | 23,800 | |
Administrative Store Expenses | 58,200 | 33,900 | |
Warehouse Expenses | 42,380 | 45,450 | |
Total Operating Expenses | |||
Income before Taxes | |||
Income Tax | 66,280 | 41,670 | |
Net Income |
To calculate: The comparative income sheet with horizontal analysis if comparative income statement of Timely Watch Company, Inc. for the year
Timely Watch Company, Inc. Comparative Income Statement Increase (Decrease) | ||||
Revenue | 2016($) | 2015($) | Amount ($) | Percent (%) |
Gross Sales | ||||
Less: Sales Returns and Allowances | ||||
Sales Discounts | ||||
Net Sales | ||||
Cost of goods sold | ||||
Merchandise Inventory Jan. |
||||
Purchases | ||||
Freight in | ||||
Goods available for sale | ||||
Less: Merchandise Inventory, Dec. 31 | ||||
Cost of goods sold | ||||
Gross Margin | ||||
Operating Expenses | ||||
Salaries and benefits | ||||
Rents and Utilities | ||||
Depreciation | ||||
Insurance | ||||
Administrative Expenses | ||||
Warehouse Expenses | ||||
Total Operating Expenses | ||||
Income before Taxes | ||||
Income tax | ||||
Net-Income |
Given Information:
The comparative income statement of Timely Watch Company, Inc. for the year
Timely Watch Company, Inc. Comparative Income Statement Increase (Decrease) | ||||
Revenue | 2016($) | 2015($) | Amount($) | Percent (%) |
Gross Sales | ||||
Less: Sales Returns and Allowances | ||||
Sales Discounts | ||||
Net Sales | ||||
Cost of goods sold | ||||
Merchandise Inventory Jan. |
||||
Purchases | ||||
Freight in | ||||
Goods available for sale | ||||
Less: Merchandise Inventory, Dec. 31 | ||||
Cost of goods sold | ||||
Gross Margin | ||||
Operating Expenses | ||||
Salaries and benefits | ||||
Rents and Utilities | ||||
Depreciation | ||||
Insurance | ||||
Administrative Expenses | ||||
Warehouse Expenses | ||||
Total Operating Expenses | ||||
Income before Taxes | ||||
Income tax | ||||
Net-Income |
Formula used:
Follow the steps to prepare a horizontal analysis of an income statement:
Step
Step
Step
Step
Step
Calculation:
Compute the amount increase or decrease in the cash balance:
For gross sales;
For Less: Sales Returns and Allowances;
Similarly, find the amount of other items;
Compute the percent increase or decrease in the income statement;
For gross sales;
For Less: Sales Returns and Allowances;
Similarly, find the percent change of other items;
Calculation for the year
Compute the net sales by substituting sales returns and allowances, sales discount and gross sales:
Compute cost of goods sold by substituting merchandise inventory, purchases and freight in, then subtract merchandise inventory for
Compute gross margin by substituting net sales and cost of goods sale:
Compute Total Operating Expenses by substituting salaries, rent and utilities, depreciation, insurance, administrative expense, and warehouse expenses:
Compute income before taxes by substituting total operating expenses and gross margin:
Compute net income by substituting income before taxes and income tax:
Calculation for the year
Compute the net sales by substituting sales returns and allowances, sales discount and gross sales:
Compute cost of goods sold by substituting merchandise inventory, purchases and freight in, then subtracting merchandise inventory for
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