Question

Using vertical analysis, prepare an income statement. (this is all the information given) (indirect method)

Robust Robots, Inc. Comparative Balance Sheet December 31, 2019 and 2018 2019 2018 Assets Current Assets: Cash Accounts Receivable, net Merchandise Inventory Supplies Prepaid Insurance Total Current Assets $ $ $ $ $ $ 65,000 150,000 135,000 9,700 30,000 389,700 $ $ $ $ $ $ 80,000 100,000 70,000 500 10,000 260,500 Property, Plant, and Equipment: Equipment Less: Accumulated Depreciation - Equipment Total Property, plant, and Equipment Total Assets $ $ $ $ 500,000 (80,000) 420,000 809,700 $ $ $ $ 240,000 (90,000) 150,000 410,500 4 Page

thats all info i have, it says indirect method on cash flow only

Answer 1

The question asked to prepare only vertical analysis. Below is the vertical analysis:

	amount ($)	vertical analysis
	2019	2018	2019	2018
sales	700000	600000	100.00%	100.00%
cost of sales	-524300	-420000	-74.90%	-70.00%
gross profit	175700	180000	25.10%	30.00%
operating expenses
salaries and wages	-47290	-100000	-6.76%	-16.67%
rent expense	-20256	-20000	-2.89%	-3.33%
depreciation expense	-20000	-10000	-2.86%	-1.67%
income from operations	88154	50000	12.59%	8.33%
loss from sale of equipment	-5213	0	-0.74%	0.00%
interest expense	-3656	-5000	-0.52%	-0.83%
income before taxes	79285	45000	11.33%	7.50%
income tax	-23786	-13500	-3.40%	-2.25%
net income	55500	31500	7.93%	5.25%