Prepare a Vertical Analysis Report of the Income Statement Shown

question 17

Essay

Prepare a vertical analysis report of the income statement shown below. Round off the percentages to two decimal places.
$\begin{array}{llcc} \text { } &2015 \\\text {Net Sales}&\$7,000\\ \text { Cost of Goods Sold} &\underline{3,800}\\ \text { Gross Profit} &\underline{\$3,200}\\\end{array}$
Operating Expenses:
$\begin{array}{llcc} \text {Selling Expenses } &\$950 \\ \text { Administrative expenses } &\underline{670}\\ \text { Total Expenses } &\underline{\$1,620}\\ \text { Operating Income } &\underline{\$1,580}\\\end{array}$

Other Revenues and (Expenses):
$\begin{array}{llcc} \text { Interest Revenue } &0 \\ \text { Interest Expense } &\underline{(750)}\\ \text {Total Revenues and (Expenses) } &\underline{(\$750)}\\ \text { Income Before Taxes } &\$830\\ \text { Income Tax Expense } &\underline{150}\\ \text { Net Income } &\underline{\$680}\\\end{array}$

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Definitions:

Reciprocity

A mutual exchange of privileges or services between two parties where each benefits from the agreement.

Industrial Buying Practice

The systematic process that organizations use to make purchase decisions regarding raw materials, processed materials, or professional services.

Products and Services

Goods that are manufactured or created for sale, and activities or benefits offered for consumption, respectively.