Vertical Analysis of Income Statement Revenue and expense data for Innovation Quarter Inc. for two recent years...

90.2K

Verified Solution

Question

Accounting

Vertical Analysis of Income Statement
Revenue and expense data for Innovation Quarter Inc. for tworecent years are as follows:
CurrentYear PreviousYear
Sales $500,000 $440,000
Cost of goods sold 340,000 277,200
Selling expenses 65,000 66,000
Administrative expenses 70,000 57,200
Income tax expense 10,000 17,600
a. Prepare an income statement in comparativeform, stating each item for both years as a percent of sales. Ifrequired, round percentages to one decimal place. Enter all amountsas positive numbers.
Innovation Quarter Inc.
Comparative Income Statement
For the Years Ended December 31
Current year Amount Current year Percent Previous year Amount Previous year Percent
Sales $500,000 % $440,000 %
Cost of goods sold 340,000 % 277,200 %
$ % $ %
Selling expenses 65,000 % 66,000 %
Administrative expenses 70,000 % 57,200 %
$ % $ %
% %
Income tax expense 10,000 % 17,600 %
$ % $ %
b. The vertical analysis indicates that thecost of goods sold as a percent of sales by 5percentage points, while selling expenses by 2percentage points, and administrative expenses by1 percentage points. Thus, net income as a percent ofsales by 2 percentage points.

Answer & Explanation Solved by verified expert

4.3 Ratings (563 Votes)

Requirement a Innovation Quarter Inc Comparative Income Statement For the Years Ended December 31 Current year Amount Current year Percent Previous year Amount Previous 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

	CurrentYear	PreviousYear
Sales	$500,000	$440,000
Cost of goods sold	340,000	277,200
Selling expenses	65,000	66,000
Administrative expenses	70,000	57,200
Income tax expense	10,000	17,600

Innovation Quarter Inc.
Comparative Income Statement
For the Years Ended December 31
	Current year Amount	Current year Percent	Previous year Amount	Previous year Percent
Sales	$500,000	%	$440,000	%
Cost of goods sold	340,000	%	277,200	%
	$	%	$	%
Selling expenses	65,000	%	66,000	%
Administrative expenses	70,000	%	57,200	%
	$	%	$	%
		%		%
Income tax expense	10,000	%	17,600	%
	$	%	$	%