Question

Return to course È Business Course Common-Size Income Statements Consider the following income statement data from the Ross Company: 2013 2012 Sales revenue $545,000 $460,000 Cost of goods sold 336,000 279,000 Selling expenses 105,000 99,000 Administrative expenses 70,000 64,000 Income tax expense 17,800 15,400 Prepare common-size income statements for each year. Note: Round answers to one decimal place (ex: 0.2345 = 23.5%). ROSS COMPANY Common-Size Income Statements (Percent of Sales Revenue) 2013 2012 Sales Revenue 100% 100% Cost of Goods Sold 61.7 % 60.7% Gross Profit on Sales . 38.3 % 39.3 % Operating Expenses Selling Expenses 19.3 % 21.5% Administrative Expenses 12.8 % 13.9% Total 6.2 % * 3.9 % * Income before Income Taxes 3.3 % x 3.3 % x Income Tax Expense 2.9 % x 0.5 % x Net Income Check

Answer 1

А 1 в с Ross Company Common Size Income Statement 2013 2012 4 Sales 100.0% 100.0% 5 Cost of Goods Sold 61.7% 60.7% 6 Gross Profit on Sales 38.3% 39.3% 7 Operating Expenses: 8 Selling Expenses 19.3% 21.5% 9 Admin Expenses 12.8% 13.9% 10 Total 32.1% 35.4% 11 Income before Income Tax 6.2% 3.9% 12 Income Tax Expense 3.3% 3.3% 13 Net Income 3.0% 0.6%

Total expense will be the sum of Selling expenses and Administration Expense. In that, you had subtracted both expenses from gross profit, which is wrong.

In case of any clarification, please do comment. Thank you.