C10 1 Lake Athletics sells two distinct product lines: Apparel and Equipment 2 T

Question

C10 1 Lake Athletics sells two distinct product lines: Apparel and Equipment 2 The income statement for each product line appears below. LAKE ATHLETICS Income Statement For the Year Ended December 31, 20x1 7 Apparel Equipment Amount Percent Amount Percent 9 Net sales 10 Cost of goods sold 11 Gross profit 12 Operating expenses 13 Operating income 14 Other income 15 Income before tax 16 Income tax expense 17 Net income 18 19 Required: 20 1. Use appropriate Excel formulas to perform vertical analysis and complete the "Percent" columns 21 for both product lines above. Express each amount as a percentage of net sales. 22 Note: You should use absolute references in the divisors of all formulas. ,400,000 800,000 20,000 241,250 2,720,000 2,830,000 875,000 10,000 1,965,000 491,000 $728,750

Explanation / Answer

1 Income Statement Apparel Equipment Amount Percent Excel formulae Amount Percent Excel formulae Net Sales 3150000 100 (C5/$C$5)*100 5550000 100.00 (F5/$F$5)*100 Cost of goods sold 1400000 44.44 (C6/$C$5)*100 2720000 49.01 (F6/$F$5)*100 Gross Profit 1750000 55.56 (C7/$C$5)*100 2830000 50.99 (F7/$F$5)*100 Operating Expenses 800000 25.40 (C8/$C$5)*100 875000 15.77 (F8/$F$5)*100 Operating Income 950000 30.16 (C9/$C$5)*100 1955000 35.23 (F9/$F$5)*100 Other Income 20000 0.63 (C10/$C$5)*100 10000 0.18 (F10/$F$5)*100 Income befor tax 970000 30.79 (C11/$C$5)*100 1965000 35.41 (F11/$F$5)*100 Income tax Expense 241250 7.66 (C12/$C$5)*100 491000 8.85 (F12/$F$5)*100 Net Income 728750 23.13 (C13/$C$5)*100 1474000 26.56 (F13/$F$5)*100 2 Product line has highest gross profit % Apparel Product line has highest Net Income % Equipment

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