Question

Selected comparative financial statements of Korbin Company follow.
KORBIN COMPANY
Comparative Income Statements
For Years Ended December 31, 2017, 2016, and 2015
2017 2016 2015
Sales $ 555,000 $ 340,000 $ 278,000
Cost of goods sold 283,500 212,500 153,900
Gross profit 271,500 127,500 124,100
Selling expenses 102,900 46,920 50,800
Administrative expenses 50,668 29,920 22,800
Total expenses 153,568 76,840 73,600
Income before taxes 117,932 50,660 50,500
Income taxes 40,800 10,370 15,670
Net income $ 77,132 $ 40,290 $ 34,830
Required:
a. Calculate the income statement data in common-size percents.

Answer 1

Answer and Explanation:

The computation is shown below:

Particulars          2015        %          2014          %            2013             %

Sales                 $555,000 100        $340,000  100       $278,000     100    Less

COGS               $283,500  51.08     $212,500  62.5  $153,900      55.36    Gross profit      $271,500  $48.92   $127,500   37.5    $124,100       44.64    Less:

Selling expenses $102,900 18.54   $46,920    13.8     $50,800       18.27    Administrative expenses $50,668 9.13  $29,920 8.8 $228,00        8.20

total expenses  $153,568   27.67     $76,480    22.49 $736,00       26.47   Income before tax $117,932 21.25    $50,660    14.9    $50,500      18.16    Income taxes     $40,800   7.35        $10,370     3.05   $15,670       5.64  

Net income        $77,132     13.90      $40,290    11.85  $34,830       12.53

For cost of goods sold percentage we simply divide the cost of goods sold by the sales and the same is applied for other items