Income statements for Gibson Company for Year 3 and Year 4follow:GIBSON COMPANYIncome Statements...Income statements...

70.2K

Verified Solution

Question

Accounting

Income statements for Gibson Company for Year 3 and Year 4follow:
GIBSON COMPANY
Income Statements
Year 4 Year 3
Sales $ 200,000 $ 180,000
Cost of goods sold 143,400 121,400
Selling expenses 22,000 20,000
Administrative expenses 12,900 14,900
Interest expense 3,800 5,800
Total expenses $ 182,100 $ 162,100
Income before taxes 17,900 17,900
Income taxes expense 5,400 3,500
Net income $ 12,500 $ 14,400

Required
a. Perform a horizontal analysis, showing thepercentage change in each income statement component between Year 3and Year 4.
b. Perform a vertical analysis, showing eachincome statement component as a percentage of sales for eachyear.

Answer & Explanation Solved by verified expert

3.7 Ratings (357 Votes)

a GIBSON COMPANY Horizontal Analysis of income statement for the year ended december 31 Change in Year 4 Year 3 Dollars a b c ab d cb100 Net sales 200000 180000 20000 111 Cost of goods sold 143400 121400 See Answer

Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:

Unlimited Question Access with detailed Answers
Zin AI - 3 Million Words
10 Dall-E 3 Images
20 Plot Generations
Conversation with Dialogue Memory
No Ads, Ever!
Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!

Become a Member

Transcribed Image Text

In: AccountingIncome statements for Gibson Company for Year 3 and Year 4follow:GIBSON COMPANYIncome Statements...Income statements for Gibson Company for Year 3 and Year 4follow:GIBSON COMPANYIncome StatementsYear 4Year 3Sales$200,000$180,000Cost of goods sold143,400121,400Selling expenses22,00020,000Administrative expenses12,90014,900Interest expense3,8005,800Total expenses$182,100$162,100Income before taxes17,90017,900Income taxes expense5,4003,500Net income$12,500$14,400Requireda. Perform a horizontal analysis, showing thepercentage change in each income statement component between Year 3and Year 4.b. Perform a vertical analysis, showing eachincome statement component as a percentage of sales for eachyear.

GIBSON COMPANY Income Statements
	Year 4		Year 3
Sales	$	200,000	$	180,000
Cost of goods sold		143,400		121,400
Selling expenses		22,000		20,000
Administrative expenses		12,900		14,900
Interest expense		3,800		5,800
Total expenses	$	182,100	$	162,100
Income before taxes		17,900		17,900
Income taxes expense		5,400		3,500
Net income	$	12,500	$	14,400