Data for Sherman, Inc are as follows
2017 2016
Net Sales $850,000 $798,000
Cost of Goods Sold 635,000 580,000
Selling and Administrative Expenses 50,000 35,000
Other Expenses 20,000 15,000
Income Tax 40,000 55,000
Prepare a horizontal analysis of the comparative income statement of Sherman, Inc (Round to one decimal place.) Use a multi-step income statement.
What will be an ideal response
Sherman, Inc.
Comparative Income Statement
Years Ended Dec. 31, 2017 and 2016
Increase (Decrease)
2017 2016 Amount Percentage
Net Sales $850,000 $798,000 $52,000 6.5
Cost of Goods Sold 635,000 580,000 55,000 9.5
Gross Profit 215,000 218,000 (3,000 ) (1.4 )
Operating Expenses:
Selling and Administrative
Expenses 50,000 35,000 15,000 42.9
Operating Income 165,000 183,000 (18,000 ) (9.8 )
Other Revenues and (Expenses):
Interest Expense (20,000 ) (15,000 ) (5,000 ) 33.3
Total Revenues and (Expenses) (20,000 ) (15,000 ) (5,000 ) 33.3
Income Before Income Taxes 145,000 168,000 (23,000 ) (13.7 )
Income Tax Expense 40,000 55,000 (15,000 ) (27.3 )
Net Income $105,000 $113,000 $(8,000 ) (7.1 )
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Jill Scott is an accountant with Cameron and Associates, a law firm in downtown Seattle. The firm maintains a checking account with Southern Rock Bank for its operating expenses
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