Sample Problems Exercises 23.1 and 23.3

Exercise 23.1 and 23.3 both use the following comparative income statement:.

Exercise 23.1 Using the comparative income statement, prepare a vertical analysis of all items from sales through gross profit on sales for the years 2007 and 2008 Click for sound: Sales1,340, %1,250, % Less sales returns & allowances 90,0007.2%50,0004.2% Net sales 1,250,000100%1,200,000100% COGS750,00060%760, % Gross profit on sales 500,00040%440, %

Exercise 23.3 Using the comparative income statement, prepare a horizontal analysis of all items on the income statement for 2008 and ChangePercent Sales1,340,0001,250,00090,0007.2% Less ret.&all. 90,00050,00040,00080% Net sales 1,250,0001,200,00050,0004.2% COGS750,000760,000-10, % Gross profit 500,000440,00060, % Selling exp. 145,000130,00015, % General exp. 185,000180,0005,0002.8% Total exp. 330,000310,00020,0006.5% Net income before tax 170,000130,00040, % Income tax exp. 59,50045,50014, % Net income after income tax 110,50084,50026, %