50.1K

Verified Solution

Link Copied!

Horizontal Analysis of the Income Statement Income statement data for Winthrop Company for two recent years ended December 31, are as follows: Current Year Previous Year Sales $671,000 564,000 $107.000 $550,000 470,000 Cost of goods sold Gross profit Selling expenses $30,240 $80,000 $27,000 22,000 Administrative expenses Total operating expenses $49,000 26,400 $56,640 $50,360 20,100 Income before income tax $31,000 Income tax expenses 12.400 Net Income $30,260 $18,600 a. Prepare a comparative income statement with horizontal analysis, indicating the increase (decrease) for the current year when compared with the previous year. If required, round to one decimal place Winthrop Company Comparative Income Statement For the Years Ended December 31 Current Previous Increase increase year year (Decrease) (Decrease) Amount Amount Amount Percent 5671.000 $50,000 $ Cost of goods sold 564,000 470.000 a. Prepare a comparative income statement with horizontal analysis, indicating the increase (decrease) for the current year when compared with the previous year. If required, round to one decimal place. Winthrop Company Comparative Income Statement For the Years Ended December 31 Current Previous Increase Increase year year (Decrease) (Decrease) Amount Amount Amount Percent Sales $671,000 $550,000 $ Cost of goods sold 564,000 470,000 Gross profit $107,000 $80,000 $ QULUTT Selling expenses $30,240 26,400 $27,000 22,000 Administrative expenses Total operating expenses $56,640 $49,000 Income before income tax JIJIO $31,000 $ 12.400 $50,360 20,100 Income tax expense Net income $30,260 $18,600 UI Accounting numeric field b. The net income for Winthrop Company increased between years. This increase was the combined result of an percentage in cost of goods sold. The cost of goods sold increased at a percentage increase in gross profit to be than the percentage increase in sales in sales and rate than the increase in sales, thus causing the

Answer & Explanation Solved by verified expert

See Answer