For 2016, Clapton Company reported a decline in net income. At the end of the ye
ID: 2574076 • Letter: F
Question
For 2016, Clapton Company reported a decline in net income. At the end of the year, S. Hand, the president, is presented with the following condensed comparative income statement:
Clapton Company
Comparative Income Statement
For the Years Ended December 31, 2016 and 2015
1
2016
2015
2
Sales
$8,887,500.00
$7,900,000.00
3
Cost of goods sold
3,265,333.00
2,633,333.00
4
Gross profit
$5,622,167.00
$5,266,667.00
5
Selling expenses
$1,171,800.00
$930,000.00
6
Administrative expenses
725,000.00
580,000.00
7
Total operating expenses
$1,896,800.00
$1,510,000.00
8
Income from operations
$3,725,367.00
$3,756,667.00
9
Other income
143,000.00
130,000.00
10
Income before income tax
$3,868,367.00
$3,886,667.00
11
Income tax expense
46,000.00
40,000.00
12
Net income
$3,822,367.00
$3,846,667.00
Clapton Company
Comparative Income Statement
For the Years Ended December 31, 2016 and 2015
eorgo Football& Recn t C | Not seure 1 v2.cengageww.co.nil of income statement Tncome Statement Final Question 2. PE.15 2B For 2010. Clapton Company reporteddocline n net income. At the cnd ofthe Year, S. Hand, the Prepare comparatve ncome statement with nenzontai analysis for the two-year Denoocang 2015 zs the base year. Use the ms n to ngicsteant v petent decrease, i reered,round cercertapes to ne dezmmal pvaze pres dent, is presented with the fellowing condensed comparative income tateman 5. PE.15-5.8 6 PE 15-11.H Clapten Company Comparathe Income Statement For the Years Ended December 3, 2016 and 201 Claptan Company Comparative Incoma Statemant For the Years Fnded D CAmher 31, 201 and 2015 016 015 9 Ex.1b-b.Ag 10. EX 15-6ALG 1. LX.15 9.ALGO 12. EX 15-11 ALGO 13. CX.15 21ALGo 006 2015 2633.333.00 ss, 22.167.00 $5210.267.00 111,0000000.00 53000000 189530000 S151000000 3725.367.00 5666700 Caunsp.uf 326515300 15 333.0 65201000 5.%21«10027.0 S55.50000 S0S24:.22010 145.00000 51356.80000S1510C053000 $3.725.367.00|53.7567.co s(31.300.00: 725,000 00 Scling xperccs .1710090 ncome fromaperations 25.00000 5800000 Other income 15. PT.15-2 Ao 670 $586 66700 143,000 100% 10,000.00 6.(02.00 0.00320 1508 Net T Previcus Next Progress: 14/15 items ssignment Score: 70.19 Olype here to search 1117 2217Explanation / Answer
Clapton Company
Comparative Income Statement
For the Years Ended December 31, 2016 and 2015
Horizontal Analysis
1
2015
2016
change in Value (value of 2016- value of 2015)
Percent change in value over the period =(change in value/value of 2015)*100
2
Sales
$7,900,000.00
$8,887,500.00
$987,500.00
12.5%
3
Cost of goods sold
2,633,333.00
3,265,333.00
$632,000.00
24.0%
4
Gross profit
$5,266,667.00
$5,622,167.00
$355,500.00
6.7%
5
Selling expenses
$930,000.00
$1,171,800.00
$241,800.00
26.0%
6
Administrative expenses
580,000.00
725,000.00
$145,000.00
25.0%
7
Total operating expenses
$1,510,000.00
$1,896,800.00
$386,800.00
25.6%
8
Income from operations
$3,756,667.00
$3,725,367.00
($31,300.00)
-0.8%
9
Other income
130,000.00
143,000.00
$13,000.00
10.0%
10
Income before income tax
$3,886,667.00
$3,868,367.00
($18,300.00)
-0.5%
11
Income tax expense
40,000.00
46,000.00
$6,000.00
15.0%
12
Net income
$3,846,667.00
$3,822,367.00
($24,300.00)
-0.6%
2-
Few conclusion that we can draw from this horizontal analysis is that the level of sales, gross profit has increased at lower rate in comparison to increase rate of various expenses so company should focus on reducing various expenses to bring the company into profitable stage
Clapton Company
Comparative Income Statement
For the Years Ended December 31, 2016 and 2015
Horizontal Analysis
1
2015
2016
change in Value (value of 2016- value of 2015)
Percent change in value over the period =(change in value/value of 2015)*100
2
Sales
$7,900,000.00
$8,887,500.00
$987,500.00
12.5%
3
Cost of goods sold
2,633,333.00
3,265,333.00
$632,000.00
24.0%
4
Gross profit
$5,266,667.00
$5,622,167.00
$355,500.00
6.7%
5
Selling expenses
$930,000.00
$1,171,800.00
$241,800.00
26.0%
6
Administrative expenses
580,000.00
725,000.00
$145,000.00
25.0%
7
Total operating expenses
$1,510,000.00
$1,896,800.00
$386,800.00
25.6%
8
Income from operations
$3,756,667.00
$3,725,367.00
($31,300.00)
-0.8%
9
Other income
130,000.00
143,000.00
$13,000.00
10.0%
10
Income before income tax
$3,886,667.00
$3,868,367.00
($18,300.00)
-0.5%
11
Income tax expense
40,000.00
46,000.00
$6,000.00
15.0%
12
Net income
$3,846,667.00
$3,822,367.00
($24,300.00)
-0.6%
2-
Few conclusion that we can draw from this horizontal analysis is that the level of sales, gross profit has increased at lower rate in comparison to increase rate of various expenses so company should focus on reducing various expenses to bring the company into profitable stage
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