Chapher 13 Homework E13-3 Preparing and Interpreting a Schedule for Horizontal a

Question

Chapher 13 Homework E13-3 Preparing and Interpreting a Schedule for Horizontal and Vertical Analyses [LO 13-2, 13-3, 13-5] According to the producer price index database maintained by the Bureau Required 1. Conduct a horizontal analysis by year of Labor Statistics, the average cost of computer equipment fell 8.1 percent between 2012 and 2013 calculating the year-over-year changes in each line hem, expressed in dollars and in percentages for the income statement of Computer Tycoon Inc. for the year ended December 31, 2013 3. (Decreases should be indicated by a minus sign. Round your per centage answers to 1 decimal place) COON, INC. Income Statements For the Year Ended December 31 Change in Sales Revenue Cost of Goods Sold S 120,000 $150,000 9.500 0.500 70,000 50,000 38,000 1000 Proft Selling, General, and Administrative Expenses Interest Expense Income before Income Tax Expense ncome Tax Expense 8,925 7,000 11,300 2-a. Conduct a vertical analysis by expressing each line as a percentage of total revenues (Round your percentage answers to 1 decimal place) Prtscn End PgDn ns Esc

Explanation / Answer

Change in 2013 2012 Dollar Percentage Sales revenue 120000 150000 -30000 -20.0% Cost of goods sold 70000 79500 -9500 -11.9% Gross Profit 50000 70500 -20500 -29.1% Selling, general and administrative expenses 38000 41000 -3000 -7.3% Interest expense 700 575 125 21.7% Income before income tax expense 11300 28925 -17625 -60.9% Income tax expense 2500 7000 -4500 -64.3% Net income 8800 21925 -13125 -59.9% 2013 2012 Sales revenue 120000 100.0% 150000 100.0% Cost of goods sold 70000 58.3% 79500 53.0% Gross Profit 50000 41.7% 70500 47.0% Selling, general and administrative expenses 38000 31.7% 41000 27.3% Interest expense 700 0.6% 575 0.4% Income before income tax expense 11300 9.4% 28925 19.3% Income tax expense 2500 2.1% 7000 4.7% Net income 8800 7.3% 21925 14.6% 2b No

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