(b) Complete the Vertical Analysis table Vertical Analysis Income Statement 2018 2019 Gross Sales* $950 $1,350...
(b) Complete the Vertical Analysis table
|
Vertical Analysis |
||||
|
Income Statement |
2018 |
2019 |
||
|
Gross Sales* |
$950 |
$1,350 |
||
|
Cost of Goods Sold |
$160 |
$175 |
||
|
Gross Margin |
$790 |
$1,175 |
||
|
Expenses: |
||||
|
Salaries ** |
$150 |
$165 |
||
|
Warehousing Costs |
$80 |
$80 |
||
|
Advertising *** |
$60 |
$70 |
||
|
Bad Debt **** |
$55 |
$55 |
||
|
Total expenses |
$345 |
$370 |
||
|
Net Income |
$445 |
$805 |
||
|
* Customer Returns amounted to $350 in each year |
||||
|
** Salaries include Commission and Bonus |
||||
|
*** Advertising includes newspaper, fliers, radio and TV ads |
||||
|
**** Allowances for Bad Debts typically represent 10% of Gross Sales |
Homework Answers
Vertical analysis will be prepared as follows
| 2018 | 2019 | |||
| $ | % | $ | % | |
| Gross Sales* | 950 | 158.33% | 1350 | 135.00% |
| Less: Sales Returns | -350 | -58.33% | -350 | -35.00% |
| Net Sales | 600 | 100.00% | 1000 | 100.00% |
| Cost of Goods Sold | 160 | 26.67% | 175 | 17.50% |
| Gross Margin | 790 | 131.67% | 1175 | 117.50% |
| 0.00% | ||||
| Expenses: | 0.00% | |||
| Salaries ** | 150 | 25.00% | 165 | 16.50% |
| Warehousing Costs | 80 | 13.33% | 80 | 8.00% |
| Advertising *** | 60 | 10.00% | 70 | 7.00% |
| Bad Debt **** | 55 | 9.17% | 55 | 5.50% |
| Total expenses | 345 | 57.50% | 370 | 37.00% |
| Net Income | 445 | 74.17% | 805 | 80.50% |
Notes
To prepare vertical analysis of an income statement, all items of an income statement are expressed as a percentage of net revenues.
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Add Answer to:
(b) Complete the Vertical Analysis table
Vertical Analysis
Income Statement
2018
2019
Gross Sales*
$950
$1,350...
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