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

---

Definitions:

Spotlight Effect

The tendency to overestimate the extent to which one's actions and appearance are noted by others.

Inferiority Complex

A psychological condition that exists when a person feels inferior to others in some way, leading to lowered self-esteem and confidence.

Weak Superego

A term in Freudian psychoanalysis referring to an underdeveloped superego, which results in difficulty controlling impulses and adhering to societal norms and morals.

Reality Principle

In psychoanalytic theory, it is the counterbalance to the pleasure principle, guiding behavior to consider the external world and act in realistic ways.