Question
17.3
3.
Horizontal Analysis of the Income Statement
Income statement data for Winthrop Company for two recent years ended December 31, are as follows:
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.
Increase
(Decrease)
Percent
Current Year Previous Year Sales $371,200 $290,000 Cost of goods sold 302,400 240,000 Gross profit $68,800 $50,000 Selling expenses $20,060 $17,000 Administrative expenses 17,640 14,000 Total operating expenses $37,700 $31,000 Income before income tax $31,100 $19,000 Income tax expenses 12,400 7,600 Net income $18,700 $11,400 Onelogin News | Dashboard CengageNOWv2 x C Chegg Study | Guide C Chegg Study | Guide ? ? ? ? ? v2 cengagenow con intake ssignment takeAssignmen Main doi voker-assignments& takeAssignmentSessionLoca or-assignment t ? ? ? ? Ch 17-3 Exercises and Problems eBook Show Me How Calculator Print Item For the Years Ended December 31 1. EX.17-01.ALGO Current Previous Increase Increase year year (Decrease) (Decrease) Amount Amount Amount Percent 2. EX.17-04.ALGO Sales 371,200$290,000 302,400 240,000 $68,800 $50,000 20,06017,000 17,640 14,000 Total operating expenses $37,700 $31,000 Income before income tax $31,100 $19,000 7,600 $18,700 $11,400 3. EX.17-05.ALGO 4. EX.17-06.ALGO 5. EX.17-19.ALGO Cost of goods sold Gross proft Selling expenses Administrative expenses 6. EX.17-20.ALGO 7. EX.17-21.ALGO 8. PR.17-04.ALGO Income tax expense 12,400 Net income b. The net income for Winthrop Company increased by 64% between years. This increase was the combined result of an cost of goods sold. The cost of goods sold increased at a thus causing the percentage increase in gross profit to be sales in sales of 28% and in percentage ? rate than the increase in sales than the percentage increase in Check My Work 2 more Check My Work uses remaining PrevioUS Next Type here to search 2:11 AM 4/20/2018 25
Explanation / Answer
a) Winthrop Company Comparative Income Statement For the Years Ended December 31 Current Previous Increase Increase year year (Decrease) (Decrease) Amount Amount Amount Percent Sales 3,71,200 2,90,000 81,200 28% Cost of goods sold 3,02,400 2,40,000 62,400 26% Gross profit 68,800 50,000 18,800 38% Selling expenses 20,060 17,000 3,060 18% Administrative expenses 17,640 14,000 3,640 26% Total operating expenses 37,700 31,000 6,700 22% Income before income tax 31,100 19,000 12,100 64% Income tax expenses 12,400 7,600 4,800 63% Net income 18,700 11,400 7,300 64% b) Increase 26% increase lower 10% more (38%-28%)
