Question

Problem 13-1A (Part Level Submission) Here are comparative statement data for Sandhill Company and Carla Vista Company, two competitors. All balance sheet data are as of December 31, 2017, and December 31, 2016. Sandhill Company Carla Vista Company 2017 2016 2017 2016 Net sales $1,889,000 $578,000 Cost of goods sold 1,074,000 284,000 Operating expenses 270,000 92,000 Interest expense 6,900 3,500 Income tax expense 65,800 29,000 Current assets 590,015 $565,462 150,838 $ 143,835 Plant assets (net) 953,508 905,000 252,908 227,720 Current liabilities 120,048 137,225 63,980 54,809 Long-term liabilities 206,322 162,900 53,612 45,250 Common stock, $10 par 905,000 905,000 217,200 217,200 Retained earnings 312,153 265,337 68,954 54,296 (a) Prepare a vertical analysis of the 2017 income statement data for Sandhill Company and Carla Vista Company. (Round all ratios to 1 decimal place, e.g. 2.5%.) Condensed Income Statement For the Year Ended December 31, 2017 Sandhill Company Carla Vista Company Dollars Percent Dollars Percent $1,889,000 % $578,000 % 1,074,000 % 284,000 % 815,000 % 294,000 % 270,000 % 92,000 % 545,000 % 202,000 % 6,900 % 3,500 % 538,100 % 198,500 % 65,800 % 29,000 % $472,300 % $169,500 %

Answer 1

a) Vertical Analysis of Income Statement:

Condensed Income Statement For the vear ended December 31, 2017 Sandhill Company Particulars Carla Vista Company Dollars ($) Percent (%) Dollars ($) Percent (% Net Sales Cost of goods sold Gross Profit 1,889,000 1,074,000 815,000 270,000 545,000 100%) 578.000 56.86%284,000 43.14%| 294.000 %) 92.000 28.85%) 202.000 100% 49.13% 50.87% 15.92% 34.95% ating Expenses ating Income 10 Other expenses and losses 12 13 14 15 Interest Ex Income before Income Taxes Income Tax Expense 6,900 538,100 65,800 472,300 0.37% 28.49%) %) 25.00% | 3,500 198.500 29.000 169.500 0.61% 34.34% 5.02% 29.33% pense Net Income

Excel formulas:

Condensed Income Statement For the vear ended December 31, 2017 Particulars Sandhill Company Dollars ($) Percent(%) Dollars ($) Percent (% 1889000 1 1074000 17 16 Carla Vista Company Net Sales Cost of goods sold Gross Profit 578000 1 284000 K7 K6 -I8/T6 -I9/16 -110/16 =16-17 ating Expenses rating Income 270000 -I8-I9 92000 10 Other expenses and losses Int Income before Income Taxes Income Tax Expense erest Expense -I12/16 3500 -K10-K12 K13/K6 29000 -K12/K6 12 13 14 15 I10-112 I1316 65800 114.16 Net Income 113-114-115/16 K13-K14 -K15/K6