The Following Selected Amounts Were Extracted from the Financial Statements

question 55

Essay

The following selected amounts were extracted from the financial statements of Missinger Corporation.
$\begin{array}{lrrrr}& \text { Year 4 } & \text { Year 3 } & \text { Year 2 } & \text { Year 1 } \\\text { Net sales } & \$ 720,000 & \$ 690,000 & \$ 660,000 & \$ 600,000 \\\text { Gross margin } & 464,000 & 448,000 & 436,000 & 400,000 \\\text { Net income } & 113,000 & 111,000 & 108,000 & 100,000\end{array}$
a.Prepare a trend analysis for net sales,gross margin,and net income using Year 1 as the base year.
b.For net sales,gross margin,and net income:
1.Calculate the percentage change from Year 1 to Year 2.
2.Calculate the percentage change from Year 2 to Year 3.
c.For each of the four years,compute the percentage relationship of gross margin to net sales and the relationship of net income to net sales.
d.Identify which requirement(s)above involve(s):
1.Horizontal analysis
2.Vertical analysis
Round all answers to the nearest tenth of 1 percent.
a. Prepare a trend analysis for net sales, gross margin, and net income using Year 1 as the base year.
b. For net sales, gross margin, and net income:

---

Definitions:

Authority

The legal or formal right to make decisions, to give orders, and to control resources and people.

Dormant Commerce Clause

A restriction on states’ authority that is implied in the commerce clause of the U.S. Constitution: The power given to Congress to enact legislation that affects interstate commerce in effect prohibits a state from passing legislation that improperly burdens interstate commerce.

Discriminated

Treated unjustly or unfairly based on particular characteristics, such as race, age, or gender.

Out-of-state Wineries

Wineries located outside of a particular state that may be subject to different regulations for selling and shipping their products to that state.