Question

Using vertical analysis, prepare and Income Satement. (this is all the infomation) (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

Answer 1

Using vertical analysis, prepare and Income Statement. (This is all the information) (indirect method)

This mean preparation of Income statement by using vertical analysis

Vertical analysis: - Vertical analysis is the proportional analysis of a financial statement, where each line item on a financial statement is listed as a percentage of another item. This means that every line item on an income statement is stated as a percentage of sales, while every line item on a balance sheet is stated as a percentage of total assets/total liabilities.

The statements prepared by following vertical analysis known as common-size statement.

	Robust Robots Inc.
	For the Year Ended December 31, 2019 and 2018
		Common Size Income Statement
		2019		2018
Particulars		28-Apr-18	%	29-Apr-17	%
Sales		$     700,000.00	100.00%	$              600,000.00	100.00%
Cost of goods sold		$     524,300.00	74.90%	$              420,000.00	70.00%
Gross profit		$     175,700.00	25.10%	$              180,000.00	30.00%
Operating Expenses
Selling and wages expenses		$       47,290.00	6.76%	$              100,000.00	16.67%
Rent expenses		$       20,256.00	2.89%	$                20,000.00	3.33%
Depriciation expenses		$       20,000.00	2.86%	$                10,000.00	1.67%
Total operating expenses		$       87,546.00	12.51%	$              130,000.00	21.67%
Income from operations		$       88,154.00	12.59%	$                50,000.00	8.33%
Loss on sale of equipment		$       (5,213.00)	-0.74%
Interest expenses		$       (3,656.00)	-0.52%	$                (5,000.00)	-0.83%
Increase (Decrease) in operating income		$       (8,869.00)	-1.27%	$                (5,000.00)	-0.83%
Income before taxes		$       79,285.00	11.33%	$                45,000.00	7.50%
Federal income taxes		$     (23,786.00)	-3.40%	$              (13,500.00)	-2.25%
Net Income		$       55,500.00	7.93%	$                31,500.00	5.25%