Question

Problem Information: The owners of Cyclepath Bicycle Store have asked you to prepare comparative income statements for the fiscal years ended March 31, 2016 and 2017. To aid in their analysis, the owners would also like you to provide common size information with the comparative statements (vertical analysis). They have provided an alphabetical list of account names and balances for the store on the second page. All accounts have normal balances. Guidelines: 1. Use Excel to prepare a professional work product for the owners. Fit the financial information on one worksheet in print-ready form. 2. Refer to the format on the third page to prepare Cyclepath's income statements. Notice that it uses the multi-step format and also includes columns for common size information. Use the numbers provided as check figures. 3. Refer to chapter 4 of the Edmonds textbook if you are not sure what should be classified as Nonoperating Items. 4. List expense accounts separately and show expenses as negative numbers. 5. Provide common size information for all statement line items, not just subtotals and totals. 6. Format numbers as follows: Use commas Use brackets () for negative numbers Use whole numbers (zero places behind the decimal point) Right align; do not center Use dollar signs ($) where appropriate on the financial statements Use two decimal places (e.g., 50.46 and 8.42) for the common size information • Pay attention to the placement of underlines, both single and double, and centering of column headings 7. Make use of Excel formulas wherever possible. . 0 O .

Answer 1

Cyclepath Bicycle Store
Income Statement
For the year ended March 31, 2016 and 2017
	2016	2017
	Amount	%	Amount	%
Sales	2,95,000		3,15,000
Less: Return	11,000		9,000
Net Sales	2,84,000	100	3,06,000	100
Cost of Goods Sold	1,89,300	67%	2,05,800	67%
Gross Margin	94,700	33%	1,00,200	33%
Operating Expense
Insurance Expense	9,000	3.17%	10,500	3.43%
Miscellaneous Expense	2,000	0.70%	500	0.16%
Rent Expense	6,000	2.11%	6,200	2.03%
Salaries Expense	32,000	11.27%	35,300	11.54%
Shipping Expense	8,000	2.82%	9,000	2.94%
Supplies Expense	9,000	3.17%	11,500	3.76%
Telephone Expense	4,000	1.41%	4,800	1.57%
Utilities Expense	5,000	1.76%	6,900	2.25%
Total Operating Expense	75,000	26.41%	84,700	27.68%
Operating Profit	19,700	6.94%	15,500	5.07%
Non operating Items
Add: Non operating Income
Interest Revenue	2,000		400
Gain on sale of Land	-		4,000
Less: Non Operating Expense
Interest Expense	3,000		4,200
Net Income	18,700	6.58%	15,700	5.13%
Less: Dividend	3,000		4,000
Profit to Retained Earnings	15,700		11,700