The comparative condensed income statements of Emley Corporation are shown below
ID: 2489069 • Letter: T
Question
The comparative condensed income statements of Emley Corporation are shown below.
EMLEY CORPORATION
Comparative Condensed Income Statements
For the Years Ended December 31
2017
2016
(a)
Prepare a horizontal analysis of the income statement data for Emley Corporation using 2016 as a base. (Enter negative amounts and percentages using either a negative sign preceding the number e.g. -45, -45% or parentheses e.g. (45), (45%). Round percentages to 1 decimal place, e.g. 12.3%.)
Increase or (Decrease)
During 2017
2017
2016
Amount
Percentage
Net sales
$660,000
$600,000
Cost of goods sold
483,000
420,000
Gross profit
177,000
180,000
Operating expenses
125,000
120,000
Net income
$52,000
$60,000
(b)
Prepare a vertical analysis of the income statement data for Emley Corporation in columnar form for both years. (Round percentages to 1 decimal place, e.g. 12.3%.)
2017
2016
Amount
Percent
Amount
Percent
Net sales
$660,000
%
$600,000
%
Cost of goods sold
483,000
%
420,000
%
Gross profit
177,000
%
180,000
%
Operating expenses
125,000
%
120,000
%
Net income
$ 52,000
%
$ 60,000
%
EMLEY CORPORATION
Comparative Condensed Income Statements
For the Years Ended December 31
2017
2016
Net sales $660,000 $600,000 Cost of goods sold 483,000 420,000 Gross profit 177,000 180,000 Operating expenses 125,000 120,000 Net income $ 52,000 $ 60,000Explanation / Answer
(a)
Determine the horizontal analysis of the income statement data for E Corporation using 2016 as a base:
E Corporation
Consolidated Income statement
Increase (Decrease) during 2017
Details
2017
2016
Amount
Percentage (%)
Net sales
$ 660,000
$ 600,000
$ 60,000
10.00
Cost of goods sold
$ 483,000
$ 420,000
$ 63,000
15.00
Gross profit
$ 177,000
$ 180,000
$ (3,000)
(1.67)
Operating expenses
$ 125,000
$ 120,000
$ 5,000
4.17
Net income
$ 52,000
$ 60,000
$ (8,000)
(13.33)
(b)
Determine the vertical analysis of the income statement data for E Corporation in columnar form for both years:
E Corporation
Consolidated Income statement
Details
Net sales
2017 - $660,000
2016 - $600,000
Difference amount - $60,000
Percentage (%) - 10%
Cost of goods sold
2017 - $483,000
2016 - $420,000
Difference amount - $63,000
Percentage (%) - 15%
Gross profit
2017 - $177,000
2016 - $180,000
Difference amount - ($3,000)
Percentage (%) - (1.67%)
Operating expenses
2017 - $125,000
2016 - $120,000
Difference amount - $5,000
Percentage (%) - 4.17%
Net income
2017 - $52,000
2016 - $60,000
Difference amount - ($8,000)
Percentage (%) - (13.33%)
E Corporation
Consolidated Income statement
Increase (Decrease) during 2017
Details
2017
2016
Amount
Percentage (%)
Net sales
$ 660,000
$ 600,000
$ 60,000
10.00
Cost of goods sold
$ 483,000
$ 420,000
$ 63,000
15.00
Gross profit
$ 177,000
$ 180,000
$ (3,000)
(1.67)
Operating expenses
$ 125,000
$ 120,000
$ 5,000
4.17
Net income
$ 52,000
$ 60,000
$ (8,000)
(13.33)