Horizontal Analysis of Income Statement For 2014, Wiglaf Company reported its mo
ID: 2500525 • Letter: H
Question
Horizontal Analysis of Income Statement
For 2014, Wiglaf Company reported its most significant decline in net income in years. At the end of the year, C.S. Lewis, the president, is presented with the following condensed comparative income statement:
Prepare a comparative income statement with horizontal analysis for the two-year period, using 2013 as the base year. Use the minus sign to indicate a decrease in the "Difference" columns. If required, round to one decimal place.
Wiglaf CompanyComparative Income Statement
For the Years Ended December 31, 2014 and 2013 2014 2013 Sales $704,000 $640,000 Sales returns and allowances 39,104 32,000 Net sales $664,896 $608,000 Cost of goods sold 456,000 380,000 Gross profit $208,896 $228,000 Selling expenses $63,750 $51,000 Administrative expenses 37,760 32,000 Total operating expenses $101,510 $83,000 Income from operations $107,386 $145,000 Other income 3,177 2,600 Income before income tax $110,563 $147,600 Income tax expense 31,000 44,300 Net income $79,563 $103,300
Explanation / Answer
Wiglaf Company Comparative Income Statement For the Years Ended December 31, 2014 and 2013 2014 2013 Increase/(Decrease) % Change A B C= A-B C/B*100 Sales $704,000 $640,000 $64,000 10% Sales returns and allowances 39,104 32,000 $7,104 22% Net sales $664,896 $608,000 $56,896 9% Cost of goods sold 456,000 380,000 $76,000 20% Gross profit $208,896 $228,000 ($19,104) -8% Selling expenses $63,750 $51,000 $12,750 25% Administrative expenses 37,760 32,000 $5,760 18% Total operating expenses $101,510 $83,000 $18,510 22% Income from operations $107,386 $145,000 ($37,614) -26% Other income 3,177 2,600 $577 22% Income before income tax $110,563 $147,600 ($37,037) -25% Income tax expense 31,000 44,300 ($13,300) -30% Net income $79,563 $103,300 ($23,737) -23%
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