50.1K

Verified Solution

Link Copied!

Common-Sized Income Statement

Revenue and expense data for the current calendar year for Sorenson Electronics Company and for the electronics industry are as follows. Sorenson Electronics Company data are expressed in dollars. The electronics industry averages are expressed in percentages.

	Sorenson Electronics Company			Electronics Industry Average
Sales	$1,440,000			100	%
Cost of goods sold	(964,800)			(73)
Gross profit	$475,200			27	%
Selling expenses	$(273,600)			(11)	%
Administrative expenses	(100,800)			(10)
Total operating expenses	$(374,400)			(21)	%
Operating income	$100,800			6	%
Other revenue and expense:
Other revenue	28,800			4
Other expense	(14,400)			(3)
Income before income tax	$115,200			7	%
Income tax expense	(43,200)			(5)
Net income	$72,000			2	%

a. Prepare a common-sized income statement comparing the results of operations for Sorenson Electronics Company with the industry average. If required, round percentages to one decimal place.

Sorenson Electronics Company
Common-Sized Income Statement
	Sorenson Electronics Company Amount	Sorenson Electronics Company Percent	Electronics Industry Average
Sales	$1,440,000	%	100%
Cost of Goods Sold	(964,800)	%	(73)%
Gross profit	$475,200	%	27%
Selling Expenses	$(273,600)	%	(11)%
Administrative Expenses	(100,800)	%	(10)%
Total operating expenses	$(374,400)	%	(21)%
Operating income	$100,800	%	6%
Other revenue and expense:
Other revenue	28,800	%	4%
Other expense	(14,400)	%	(3)%
Income before income tax	$115,200	%	7%
Income tax expense	(43,200)	%	(5)%
Net income	$72,000	%	2%

b. Which of the following statements is true about Sorenson Electronics Company?

Answer & Explanation Solved by verified expert

See Answer