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Income statements for Gibson Company for Year 3 and Year 4follow:GIBSON COMPANYIncome Statements...Income statements...

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Accounting

Income statements for Gibson Company for Year 3 and Year 4follow:

GIBSON COMPANY
Income Statements
Year 4Year 3
Sales$200,000$180,000
Cost of goods sold143,400121,400
Selling expenses22,00020,000
Administrative expenses12,90014,900
Interest expense3,8005,800
Total expenses$182,100$162,100
Income before taxes17,90017,900
Income taxes expense5,4003,500
Net income$12,500$14,400


Required
a. Perform a horizontal analysis, showing thepercentage change in each income statement component between Year 3and Year 4.
b. Perform a vertical analysis, showing eachincome statement component as a percentage of sales for eachyear.

Answer & Explanation Solved by verified expert
3.7 Ratings (357 Votes)
a GIBSON COMPANY Horizontal Analysis of income statement for the year ended december 31 Change in Year 4 Year 3 Dollars a b c ab d cb100 Net sales 200000 180000 20000 111 Cost of goods sold 143400 121400    See Answer
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In: AccountingIncome statements for Gibson Company for Year 3 and Year 4follow:GIBSON COMPANYIncome Statements...Income statements for Gibson Company for Year 3 and Year 4follow:GIBSON COMPANYIncome StatementsYear 4Year 3Sales$200,000$180,000Cost of goods sold143,400121,400Selling expenses22,00020,000Administrative expenses12,90014,900Interest expense3,8005,800Total expenses$182,100$162,100Income before taxes17,90017,900Income taxes expense5,4003,500Net income$12,500$14,400Requireda. Perform a horizontal analysis, showing thepercentage change in each income statement component between Year 3and Year 4.b. Perform a vertical analysis, showing eachincome statement component as a percentage of sales for eachyear.

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