Question

value: 0.40 points Using the following income statements, perform the calculations needed for vertical analyses. (Round percentage values to 1 decimal place.) % LOCKEY FENCING CORPORATION Income Statements For the Years Ended December 31 Current Net Sales $ 210,000 Cost of Goods Sold 102.0001 Gross Profit 108,000 Selling. General, and Administrative Expenses 15,600 Income from Operations 92.400 Interest Expense 5.200 Income before Income Tax 87.2007 Income Tax Expense 26.160 $ 61,040 Net Income Previous $ 141,000: 78,000 63,000 8,900 54,100 7,050 47.050 14, 115 $ 32,935 %

Answer 1

Solution:

	Current		Previous
Net sales	210,000	100.0%	141,000	100%
COGS	102,000	48.6%	78,000	55%
Gross profit	108,000	51.4%	63,000	45%
Selling, general, and administrative expenses	15,600	7.4%	8,900	6%
Income from operations	92,400	44.0%	54,100	38%
Interest expense	5,200	2.5%	7,050	5%
Income before Income Tax	87,200	41.5%	47,050	33%
Income Tax Expense	26,160	12.5%	14,115	10%
Net income	61,040	29.1%	32,935	23%

Working:

	Current		Previous
Net sales	210,000	210,000 / 210,000 * 100	141,000	100%	141,000 / 141,000 * 100
COGS	102,000	102,000 / 210,000 * 100	78,000	55%	78,000 / 141,000 * 100
Gross profit	108,000	108,000 / 210,000 * 100	63,000	45%	63,000 / 141,000 * 100
Selling, general, and administrative expenses	15,600	15,600 / 210,000 * 100	8,900	6%	8,900 / 141,000 * 100
Income from operations	92,400	92,400 / 210,000 * 100	54,100	38%	54,100 / 141,000 * 100
Interest expense	5,200	5,200 / 210,000 * 100	7,050	5%	7,050 / 141,000 * 100
Income before Income Tax	87,200	87,200 / 210,000 * 100	47,050	33%	47,050 / 141,000 * 100
Income Tax Expense	26,160	26,160 / 210,000 * 100	14,115	10%	14,115 / 141,000 * 100
Net income	61,040	61,040 / 210,000 * 100	32,935	23%	32,935 / 141,000 * 100