Royster Company presents the following income statement: Sales $12,000 Cost of goods sold $6,000 Selling and...
Royster Company presents the following income statement:
| Sales | $12,000 |
| Cost of goods sold | $6,000 |
| Selling and administrative expense | $1,200 |
| Interest expense | $600 |
| Pretax income | $4,200 |
| Income tax expense | $1,470 |
| Net income | $2,730 |
Which of the following line items would appear on a common-size
income statement for this period?
|
Net income 65% |
||
|
Income tax expense 54% |
||
|
Pretax income 35% |
Homework Answers
Each item such as expense,pretax income,net income etc. is represented as a % of net sales in common-size income statement.
Hence net income%=(2730/12000)=22.75%
Income tax expense%=(1470/12000)=12.25%
Pretax income%=(4200/12000)=35%
Hence the correct option is C.
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