Question

Here are comparative statement data for Duke Company and Lord Company, two competitors. All balance sheet data are as of December 31, 2020, and December 31, 2019. Duke Company Lord Company 2020 2019 2020 2019 Net sales $1,884,000 $559,000 Cost of goods sold 1,079,532 296,829 Operating expenses 259,992 79,937 Interest expense 7,536 4,472 Income tax expense 54,636 6,149 Current assets 320,000 $314,200 82,300 $78,600 Plant assets (net) 521,700 500,000 139,200 124,500 Current liabilities 65,400 74,600 36,400 30,600 Long-term liabilities 108,400 89,800 29,200 25,400 Common stock, $10 par 498,000 498,000 117,000 117,000 Retained earnings 169,900 151,800 38,900 30,100

(a) Prepare a vertical analysis of the 2020 income statement data for Duke Company and Lord Company. (Round percentages to 1 decimal place, e.g. 12.1%.) Condensed Income Statement For the Quarter Ended December 31, 2020For the Year Ended December 31, 2020December 31, 2020 Duke Company Lord Company Dollars Percent Dollars Percent Cost of Goods SoldDividendsExpensesGross ProfitIncome Before Income TaxesIncome From OperationsIncome Tax ExpenseInterest ExpenseNet Income / (Loss)Net SalesOperating ExpensesOther Expenses and LossesRevenuesTotal ExpensesTotal Revenues $ % $ % Cost of Goods SoldDividendsExpensesGross ProfitIncome Before Income TaxesIncome From OperationsIncome Tax ExpenseInterest ExpenseNet Income / (Loss)Net SalesOperating ExpensesOther Expenses and LossesRevenuesTotal ExpensesTotal Revenues % % Cost of Goods SoldDividendsExpensesGross ProfitIncome Before Income TaxesIncome From OperationsIncome Tax ExpenseInterest ExpenseNet Income / (Loss)Net SalesOperating ExpensesOther Expenses and LossesRevenuesTotal ExpensesTotal Revenues % % Cost of Goods SoldDividendsExpensesGross ProfitIncome Before Income TaxesIncome From OperationsIncome Tax ExpenseInterest ExpenseNet Income / (Loss)Net SalesOperating ExpensesOther Expenses and LossesRevenuesTotal ExpensesTotal Revenues % % Cost of Goods SoldDividendsExpensesGross ProfitIncome Before Income TaxesIncome From OperationsIncome Tax ExpenseInterest ExpenseNet Income / (Loss)Net SalesOperating ExpensesOther Expenses and LossesRevenuesTotal ExpensesTotal Revenues % % Cost of Goods SoldDividendsExpensesGross ProfitIncome Before Income TaxesIncome From OperationsIncome Tax ExpenseInterest ExpenseNet Income / (Loss)Net SalesOperating ExpensesOther Expenses and LossesRevenuesTotal ExpensesTotal Revenues Cost of Goods SoldDividendsExpensesGross ProfitIncome Before Income TaxesIncome From OperationsIncome Tax ExpenseInterest ExpenseNet Income / (Loss)Net SalesOperating ExpensesOther Expenses and LossesRevenuesTotal ExpensesTotal Revenues % % Cost of Goods SoldDividendsExpensesGross ProfitIncome Before Income TaxesIncome From OperationsIncome Tax ExpenseInterest ExpenseNet Income / (Loss)Net SalesOperating ExpensesOther Expenses and LossesRevenuesTotal ExpensesTotal Revenues % % Cost of Goods SoldDividendsExpensesGross ProfitIncome Before Income TaxesIncome From OperationsIncome Tax ExpenseInterest ExpenseNet Income / (Loss)Net SalesOperating ExpensesOther Expenses and LossesRevenuesTotal ExpensesTotal Revenues % % Cost of Goods SoldDividendsExpensesGross ProfitIncome Before Income TaxesIncome From OperationsIncome Tax ExpenseInterest ExpenseNet Income / (Loss)Net SalesOperating ExpensesOther Expenses and LossesRevenuesTotal ExpensesTotal Revenues $ % $ % Click if you would like to Show Work for this question: Open Show Work

Answer 1

Ans.	Condensed Income Statements
	For the Quarter Ended December 31, 2020
		Duke Company		Lord Company
		2020	%	2020	%
	Net sales	$1,884,000	100.0%	$559,000	100.0%
	Cost of goods sold	$1,079,532	57.3%	$296,829	53.1%
	Gross profit	$804,468	42.7%	$262,171	46.9%
	Operating expenses	$259,992	13.8%	$79,937	14.3%
	Operating income	$544,476	28.9%	$182,234	32.6%
	Interest expenses	$7,536	0.4%	$4,472	0.8%
	Income before tax	$536,940	28.5%	$177,762	31.8%
	Income tax expenses	$54,636	2.9%	$6,149	1.1%
	Net income	$482,304	25.6%	$171,613	30.7%
	Amount is percentage for Duke company =   Particular amount of 2020 / Sales * 100
	Amount is percentage for Lord company =   Particular amount of 2020 / Sales * 100