Question

ts Emporium has two operating segments: sporting goods and sports apparel. The inca nent is presented below uired: omplete the "o%" columns to be used in a vertical analysis of Sports Emporium's two ope ount as a percentage of sales. (Round your answers to 1 decimal place.) SPORTS EMPORIUM Income Statement For the Year Ended December 31, 2018 Sporting Goods Sports Apparel Amount Amount Net sales $ 1675,000 990,000 685,000 400,000 285,000 17,500 302,500 75,000 S 227,500 $920,000 500,000 420,000 290,000 130,000 (12,500) 117,500 65,000 Cost of goods sold Gross proft Operating expenses Operating income Other income (expense) Income before tax Income tax expense Net income $ 52,500 2. Use vertical analysis to compare the profitability of the two operating segments. Which segment percentage of net sales? Sporting Goods

Answer 1

	Income statement	Sporting goods		Sports appreal
	Net sales	1675000	100.00%	920000	100.00%
Less	Cost of goods sold	990000	59.10%	500000	54.35%
	Gross profit	685000	40.90%	420000	45.65%
Less	Operating expense	400000	23.88%	290000	31.52%
	Operating income	285000	17.01%	130000	14.13%
	Other income (expense)	17500	1.04%	-12500	-1.36%
	Income before taxes	302500	18.06%	117500	12.77%
Less	Income tax expense	75000	4.48%	65000	7.07%
	Net income	227500	13.58%	52500	5.71%
	Sports appreal has more gross profit percentage
	Sporting goods have more net income percentage