Ask Question
22 September, 22:07

Revenue and expense data for Innovation Quarter Inc. for two recent years are as follows:Current Year Previous YearSales $4,000,000 $3,600,000Cost of goods sold 2,280,000 1,872,000Selling expenses 600,000 648,000Administrative expenses 520,000 360,000Income tax expense 240,000 216,000a. Prepare an income statement in comparative form, stating each item for both years as a percent of sales. If required, round percentages to one decimal place. Enter all amounts as positive numbers.

+3
Answers (1)
  1. 22 September, 22:21
    0
    Innovation Quarter Inc. - Common Size Income Statement

    Previous Year Current Year

    Sales 100% 100%

    Cost of Goods sold 52% 57%

    Gross Profit 48% 43%

    Operating Expenses

    Selling Expense 18% 15%

    Administrative Expense 10% 13%

    Total Operating Expense 28% 28%

    Profit Before Tax 20% 15%

    Income Tax 6% 6%

    Profit After Tax 14% 9%

    Explanation:

    This is basically known as common sizing where each item in the financial statement is represented as a percentage of a base item. For income statement it is usually revenue and for statement of financial position (balance sheet) it is total asset and total liabilities.
Know the Answer?
Not Sure About the Answer?
Find an answer to your question 👍 “Revenue and expense data for Innovation Quarter Inc. for two recent years are as follows:Current Year Previous YearSales $4,000,000 ...” in 📗 Business if the answers seem to be not correct or there’s no answer. Try a smart search to find answers to similar questions.
Search for Other Answers