Chapter 18 Accounting
The income statements for the first three years of operations of Carol’s Music Ltd. are provided below:
2022 | 2021 | 2020 | |||||||||||||||
Revenue ......................................... | $ 143,750 | $ 115,000 | $ 100,000 | ||||||||||||||
Cost of goods sold ......................... | 68,350 | 53,820 | 46,000 | ||||||||||||||
Gross profit .................................... | 75,400 | 61,180 | 54,000 | ||||||||||||||
Expenses | |||||||||||||||||
Salaries................................... | 19,000 | 15,080 | 13,000 | ||||||||||||||
Depreciation expense ............ | 22,000 | 15,000 | 4,000 | ||||||||||||||
Other operating expenses ..... | 27,360 | 22,800 | 20,000 | ||||||||||||||
Total operating expenses ...... | 68,360 | 52,880 | 37,000 | ||||||||||||||
Profit from operations .................. | 7,040 | 8,300 | 17,000 | ||||||||||||||
Interest expense ............................ | (5,000) | (3,000) | (1,000) | ||||||||||||||
Income tax expense ...................... | (600) | (980) | (2,000) | ||||||||||||||
Profit .............................................. | $ 1,440 | $ 4,320 | $ 14,000 | ||||||||||||||
Instructions
a) Is Carol’s gross profit improving over the three years or not? Use horizontal analysis, with 2020 as the base year, to support your answer.
b) Provide one explanation for the decline in income from operations other than changes in gross profit. Support your answer using vertical analysis.
c) Although profit is decreasing, Carol has not been concerned because her cash flows have increased from year to year. Using the information available in the income statements, explain why this is so.
Homework Answers
Requirement a
Carol's gross profit has improved over three years. The gross profit in 2022 has increased by $21,400 from the gross profit in 2020. There is a 39.63% increase from 2020 in gross profits.
Requirement b
If you look into the vertical analysis of Carol Music Ltd, we can identify that Total operating expense was only 37.00% of sales in 2020, later it became 45.98% in 2021, and increased to be 47.55% in 2022. So total operating expense has increased over three years when compared to sales.
Requirement c
Depreciation is a non cash expense, so when computing cash flow during a period, depreciation should be added back to the profit. If you look in the above table, you can identify that the cash flow has increased over years, even though the profit has decreased.
The following are the financial statements of Nosker Company. NOSKER COMPANY Comparative Balance Sheets December 31...
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Instructions: Prepare a horizontal analysis of the income statement for Cookie & Coffee Creations Inc. using...
Instructions: Prepare a horizontal analysis of the income
statement for Cookie & Coffee Creations Inc. using 2019 as a
base year (which is a continuation of the Continuing Cookie
Chronicle)
Note: Do not use the information
presented on the Textbook website, it is different from what is
required below. You may refer to the information within Chapter 13
(week 6) for assistance in completing this tab.
COOKIE & COFFEE CREATIONS INC. Income Statement For the Year Ended October 31 Horizontal...
OAKBROOK COMPANY Comparative Income Statements For Years Ended December 31, 2017 and 2016 2017 2016 Sales...
OAKBROOK COMPANY Comparative Income Statements For Years Ended December 31, 2017 and 2016 2017 2016 Sales $ 980 $ 850 Less cost of goods sold 525 415 Gross profit 455 435 Less operating expenses: Wage expense 90 88 Depreciation expense 18 12 Rent expense 23 20 Miscellaneous expense 24 36 Total operating expenses 155 156 Operating income 300 279 Less other expenses: Interest 9 33 Income before tax 291 246 Less income tax expense 116 98 Net income $ 175...
RCES Part Part Exercise 5-10 a-c (Part Level Submission) (Video) In its income statement for the...
RCES Part Part Exercise 5-10 a-c (Part Level Submission) (Video) In its income statement for the year ended December 31, 2020, Swifty Company reported the following condensed data. Operating expenses $763,520 Interest revenue $32,220 Cost of goods sold 1,292,100 Loss on disposal of plant assets 19,670 Interest expense 74,210 Net sales 2,408,400 Other comprehensive loss 8,300 Part (Part (a) Your answer is partially correct. Try again. (Part Prepare a multiple-step income statement. (List other revenues before other expenses. Enter negative...
WPitten Problems! 6. The following accounts were extracted from the accounting records of Teutonic Enterprises following...
WPitten Problems! 6. The following accounts were extracted from the accounting records of Teutonic Enterprises following its first year of operations, June 30, 2019: Rent expense $ 7,500 Truck 13,600 Accounts payable 8,300 Supplies expense 2,500 Service revenue 55,000 Cost of Goods Sold 20,800 Salary expense 2,200 Accounts receivable 13,200 Utilities expense 5,000 Common stock 25,000 20,900 Depreciation Exp-truck 1,600 Cash Prepare an income statement, a statement of shareholders' equity, and a balance sheet for Teutonic Enterprises. 7. Prepare a...
20X4 20X3 Cash $ 5,100 $ 4,800 Accounts Receivable $ 9,010 $ 6,100 Inventory $ 10,400...
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CALCUL Exercise 18-04 Operating data for Joshua Corporation are presented below. 2019 Sales revenue Cost of...
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"Exercise 18-04 Operating data for Joshua Corporation are presented below. 2020 2019 Sales revenue Cost of...
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Exercise 18-04 Operating data for Joshua Corporation are presented below. 2020 2019 Sales revenue Cost of...
Exercise 18-04 Operating data for Joshua Corporation are presented below. 2020 2019 Sales revenue Cost of goods sold Selling expenses Administrative expenses Income tax expense Net income $753,000 469,872 115,209 63,252 29,367 75,300 $605,000 392,040 71,390 57,475 24,200 59,895 Prepare a schedule showing a vertical analysis for 2020 and 2019. (Round answers to 1 decimal place, e.g. 48.5%.) JOSHUA CORPORATION Condensed Income Statements For the Years Ended December 31 2020 Amount Percent Amount 2019 Percent Sales revenue $753,000 % $605,000...
pls do both colums Exercise 18-04 Operating data for Joshua Corporation are presented below. 2020 2019...
pls do both colums
Exercise 18-04 Operating data for Joshua Corporation are presented below. 2020 2019 Sales revenue Cost of goods sold Selling expenses Administrative expenses Income tax expense Net income $749,000 468,125 118,342 56,924 38,199 67,410 $605,000 393,250 70,180 53,240 26,015 62,315 Prepare a schedule showing a vertical analysis for 2020 and 2019. (Round answers to 1 decima 48.5%.) JOSHUA CORPORATION Condensed Income Statements For the Years Ended December 31 2020 Amount Percent Amount 2019 Percent Sales revenue $749,000...
Instructions: Prepare a horizontal analysis of the income
statement for Cookie & Coffee Creations Inc. using 2019 as a
base year (which is a continuation of the Continuing Cookie
Chronicle)
Note: Do not use the information
presented on the Textbook website, it is different from what is
required below. You may refer to the information within Chapter 13
(week 6) for assistance in completing this tab.
COOKIE & COFFEE CREATIONS INC. Income Statement For the Year Ended October 31 Horizontal...
RCES Part Part Exercise 5-10 a-c (Part Level Submission) (Video) In its income statement for the year ended December 31, 2020, Swifty Company reported the following condensed data. Operating expenses $763,520 Interest revenue $32,220 Cost of goods sold 1,292,100 Loss on disposal of plant assets 19,670 Interest expense 74,210 Net sales 2,408,400 Other comprehensive loss 8,300 Part (Part (a) Your answer is partially correct. Try again. (Part Prepare a multiple-step income statement. (List other revenues before other expenses. Enter negative...
WPitten Problems! 6. The following accounts were extracted from the accounting records of Teutonic Enterprises following its first year of operations, June 30, 2019: Rent expense $ 7,500 Truck 13,600 Accounts payable 8,300 Supplies expense 2,500 Service revenue 55,000 Cost of Goods Sold 20,800 Salary expense 2,200 Accounts receivable 13,200 Utilities expense 5,000 Common stock 25,000 20,900 Depreciation Exp-truck 1,600 Cash Prepare an income statement, a statement of shareholders' equity, and a balance sheet for Teutonic Enterprises. 7. Prepare a...
CALCUL Exercise 18-04 Operating data for Joshua Corporation are presented below. 2019 Sales revenue Cost of goods sold Selling expenses Administrative expenses Income tax expense Net income 2020 $755,000 463,570 123,820 58,890 31,710 77,010 $600,000 391,800 76,800 55,800 23,400 52,200 Prepare a schedule showing a vertical analysis for 2020 and 2019. (Round answers to 1 decimal place, e.g. 48.5%) JOSHUA CORPORATION Condensed Income Statements For the Years Ended December 31 2020 Amount Percent Amount 2019 Percent Sales revenue $755,000 $600,000...
"Exercise 18-04 Operating data for Joshua Corporation are presented below. 2020 2019 Sales revenue Cost of goods sold Selling expenses Administrative expenses Income tax expense Net income $749,000 468,125 118,342 56,924 38,199 67,410 $605,000 393,250 70,180 53,240 26,015 62,315 Prepare a schedule showing a vertical analysis for 2020 and 2019. (Round answers to 1 decima 48.5%.) JOSHUA CORPORATION Condensed Income Statements For the Years Ended December 31 2020 Amount Percent Amount 2019 Percent Sales revenue $749,000 $605,000 Cost of goods...
Exercise 18-04 Operating data for Joshua Corporation are presented below. 2020 2019 Sales revenue Cost of goods sold Selling expenses Administrative expenses Income tax expense Net income $753,000 469,872 115,209 63,252 29,367 75,300 $605,000 392,040 71,390 57,475 24,200 59,895 Prepare a schedule showing a vertical analysis for 2020 and 2019. (Round answers to 1 decimal place, e.g. 48.5%.) JOSHUA CORPORATION Condensed Income Statements For the Years Ended December 31 2020 Amount Percent Amount 2019 Percent Sales revenue $753,000 % $605,000...
pls do both colums
Exercise 18-04 Operating data for Joshua Corporation are presented below. 2020 2019 Sales revenue Cost of goods sold Selling expenses Administrative expenses Income tax expense Net income $749,000 468,125 118,342 56,924 38,199 67,410 $605,000 393,250 70,180 53,240 26,015 62,315 Prepare a schedule showing a vertical analysis for 2020 and 2019. (Round answers to 1 decima 48.5%.) JOSHUA CORPORATION Condensed Income Statements For the Years Ended December 31 2020 Amount Percent Amount 2019 Percent Sales revenue $749,000...
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