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a.
Revenues: Amount Percent Amount Percent
Admissions 90,639$ 100,694$
Event-related revenue 136,900 146,980
NASCAR broadcasting revenue 224,227 217,469
Other operating revenue 60,390 31,320
Total revenue 512,156$ 496,463$
Expenses and other:
Direct expenses of events (102,786)$ (104,303)$
NASCAR event management fees (137,727) (133,682)
Other direct expenses (43,784) (19,541)
General and administrative (166,663) (285,166)
Total expenses and other (450,960)$ (542,692)$
Income from continuing operations 61,196$ (46,229)$
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Exercise 14-2
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Speedway Motorsports, Inc.
Comparative Income Statement (in thousands of dollars)
For the Years Ended December 31
Current Year
Prior Year
b.
[Key essay answer here]
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a.
Revenues: Amount Percent Amount Percent
Admissions 90,639$ 17.7% 100,694$ 20.3%
Event-related revenue 136,900 26.7% 146,980 29.6%
NASCAR broadcasting revenue 224,227 43.8% 217,469 43.8%
Other operating revenue 60,390 11.8% 31,320 6.3%
Total revenue 512,156$ 100.0% 496,463$ 100.0%
Expenses and other:
Direct expenses of events (102,786)$ -20.1% (104,303)$ -21.0%
Speedway Motorsports, Inc.
Exercise 14-2
Name:
Solution
Section:
Score:
ON
Instructions
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Comparative Income Statement (in thousands of dollars)
For the Years Ended December 31
Current Year
Prior Year
management fees, remained stable at 26.9% of total revenue. The Direct expense of events remained
stable, while Other direct expenses increased by 4.6% of total revenue. General and administrative
expenses, however, decreased significantly (by 24.9% of total revenue). This decreased general and
administrative cost was the driving factor behind the increase in income from continuing operations.
An asterisk (*) will appear to the right of an incorrect entry.
Amount Percent Amount Percent
Current assets
Property, plant, and equipment
Intangible assets
Total assets
Current liabilities
Long-term liabilities
Common stock
Retained earnings
Total liabilities and equity
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Exercise 14-4
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Alvarez Company
Comparative Balance Sheet
For the Years Ended December 31, 20–
Current Year
Previous Year
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Amount Percent Amount Percent
Current assets 2,500,000$ 25.0% 1,840,000$ 20.0%
Property, plant, and equipment 5,600,000 56.0% 6,072,000 66.0%
Intangible assets 1,900,000 19.0% 1,288,000 14.0%
Total assets 10,000,000$ 100.0% 9,200,000$ 100.0%
Current liabilities 2,000,000$ 20.0% 1,380,000$ 15.0%
Long-term liabilities 3,400,000 34.0% 3,680,000 40.0%
Common stock 920,000 9.2% 920,000 10.0%
Retained earnings 3,680,000 36.8% 3,220,000 35.0%
Total liabilities and equity 10,000,000$ 100.0% 9,200,000$ 100.0%
Score:
ON
Exercise 14-4
Name:
Solution
Section:
Comparative Balance Sheet
For the Years Ended December 31, 20–
Current Year
Previous Year
Instructions
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Alvarez Company
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a.
Current Year Previous Year
Amount Amount Amount Percent
Sales 2,240,000$ 2,000,000$
Cost of goods sold (1,925,000) (1,750,000)
Gross profit 315,000$ 250,000$
Selling expenses (152,500)$ (125,000)$
Administrative expenses (118,000) (100,000)
Ex
Total operating expenses (270,500)$ (225,000)$
Income before income tax expense 44,500$ 25,000$
Income tax expense (17,800) (10,000)
Net income 26,700$ 15,000$
b.
Exercise 14-5
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[Key essay answer here]
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Key Code:
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Winthrop Company
Comparative Income Statement
For the Years Ended December 31
Increase (Decrease)
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a.
Current Year Previous Year
Amount Amount Amount Percent
Sales 2,240,000$ 2,000,000$ 240,000$ 12.0%
Cost of goods sold (1,925,000) (1,750,000) 175,000 10.0%
Gross profit 315,000$ 250,000$ 65,000$ 26.0%
Selling expenses (152,500)$ (125,000)$ 27,500$ 22.0%
Administrative expenses (118,000) (100,000) 18,000 18.0%
Total operating expenses (270,500)$ (225,000)$ 45,500$ 20.2%
Income before income tax expense 44,500$ 25,000$ 19,500$ 78.0%
Income tax expense (17,800) (10,000) 7,800 78.0%
Net income 26,700$ 15,000$ 11,700$ 78.0%
b.
Score:
ON
Exercise 14-5
Name:
Solution
Section:
Comparative Income Statement
For the Years Ended December 31
Increase (Decrease)
The net income for Winthrop Company increased by 78% between years. This increase was the combined
result of an increase in sales of 12% and a lower percentage increase in cost of goods sold. As a result, the
percentage increase in gross profit exceeded the percentage increase in sales.
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Winthrop Company
0
# N-box Incorrects due to blanks COUNTIF(B15:AT24,” “)
22
# N-box +B-box corrects COUNTIF(B15:AT24,” “)
0
Total SUM(AD13:AD15)
22
Percentage =(AD16-AD13-AD14)/AD16
0%
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If number-entry box is blank (this would be an incorrect answer for N-boxes), error check returns two spaces, ” “
If number-entry or blank-entry box is incorrect, returns “*”
1. If number-entry or blank-entry box is correct, returns single space, ” “
Use data verification to set data entry to whole number >= 0, and use drop-downs for lables and names, so that students can’t enter a space in a box and have it counted as correct.
Conditional formatting might be used but wasn’t here, to hide some of the error check return symbols. If A1 = “~*”, then font = red, if something else, then font = background color.
20Y2 20Y1
Amount Amount Amount Percent
Sales 16,800,000$ 15,000,000$
Cost of goods sold (11,500,000) (10,000,000)
Gross profit 5,300,000$ 5,000,000$
Selling expenses (1,770,000)$ (1,500,000)$
Administrative expenses (1,220,000) (1,000,000)
Total operating expenses (2,990,000)$ (2,500,000)$
Operating income 2,310,000$ 2,500,000$
Other revenue 256,950 225,000
Income before income tax expense 2,566,950$ 2,725,000$
Income tax expense (1,413,000) (1,500,000)
Net income 1,153,950$ 1,225,000$
2.
Problem 14-1A
Name:
Section:
[Key essay answer here]
Score:
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Key Code:
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McDade Company
Comparative Incom e Statem ent
For the Years Ended December 31, 20Y2 and 20Y1
Increase (Decrease)
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1.
20Y2 20Y1
Amount Amount Amount Percent
Sales 16,800,000$ 15,000,000$ 1,800,000$ 12.0%
Cost of goods sold (11,500,000) (10,000,000) 1,500,000 15.0%
Gross profit 5,300,000$ 5,000,000$ 300,000$ 6.0%
Selling expenses (1,770,000)$ (1,500,000)$ 270,000$ 18.0%
Administrative expenses (1,220,000) (1,000,000) 220,000 22.0%
Total operating expenses (2,990,000)$ (2,500,000)$ 490,000$ 19.6%
Operating income 2,310,000$ 2,500,000$ (190,000)$ -7.6%
Other revenue 256,950 225,000 31,950 14.2%
Income before income tax expense 2,566,950$ 2,725,000$ (158,050)$ -5.8%
Income tax expense (1,413,000) (1,500,000) 87,000 -5.8%
Net income 1,153,950$ 1,225,000$ (71,050)$ -5.8%
2.
Score:
ON
Problem 14-1A
Name:
Solution
Section:
Comparative Income Statement
For the Years Ended December 31, 20Y2 and 20Y1
Increase (Decrease)
Net income has declined from 20Y1 to 20Y2. Sales have increased by 12.0%; however, cost of goods sold has
increased by 15.0%, causing the gross profit to increase at a slower pace than sales. In addition, total operating
expenses have increased at a faster rate than sales (19.6% increase vs. 12.0% sales increase). Increases in costs
and expenses that are higher than the increase in sales have caused the net income to decline by 5.8%.
Instructions
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McDade Company
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1.
20Y2 20Y1
Amount Amount Amount Percent
Sales 910,000$ 700,000$
Cost of goods sold (441,000) (350,000)
Gross profit 469,000$ 350,000$
Selling expenses (139,150)$ (115,000)$
Administrative expenses (99,450) (85,000)
Total operating expenses (238,600)$ (200,000)$
Operating income 230,400$ 150,000$
Ex
Other revenue 65,000 50,000
Income before income tax expense 295,400$ 200,000$
Income tax expense (65,000) (50,000)
Net income 230,400$ 150,000$
2.
Problem 14-1B
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Macklin Inc.
Comparative Income Statement
For the Years Ended December 31, 20Y2 and 20Y1
Increase (Decrease)
[Key essay answer here]
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1.
20Y2 20Y1
Amount Amount Amount Percent
Sales 910,000$ 700,000$ 210,000$ 30.0%
Cost of goods sold (441,000) (350,000) 91,000 26.0%
Gross profit 469,000$ 350,000$ 119,000$ 34.0%
Selling expenses (139,150)$ (115,000)$ 24,150$ 21.0%
Administrative expenses (99,450) (85,000) 14,450 17.0%
Total operating expenses (238,600)$ (200,000)$ 38,600$ 19.3%
Operating income 230,400$ 150,000$ 80,400$ 53.6%
Other revenue 65,000 50,000 15,000 30.0%
Income before income tax expense 295,400$ 200,000$ 95,400$ 47.7%
Income tax expense (65,000) (50,000) 15,000 30.0%
Net income 230,400$ 150,000$ 80,400$ 53.6%
2.
Score:
ON
Problem 14-1B
Name:
Solution
Section:
Comparative Income Statement
For the Years Ended December 31, 20Y2 and 20Y1
Increase (Decrease)
The profitability has significantly improved. Sales have increased by 30% over the 20Y1 base year.
However, cost of goods sold, selling expenses, and administrative expenses grew at a slower rate.
Increasing sales combined with costs that increase at a slower rate results in strong earnings growth. In this
case, net income grew 53.6% over the base year.
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Macklin Inc.
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1.
Amount Percent Amount Percent
Sales 1,500,000$ 1,250,000$
Cost of goods sold (510,000) (475,000)
Gross profit 990,000$ 775,000$
Selling expenses (270,000)$ (200,000)$
Administrative expenses (180,000) (156,250)
Total operating expenses (450,000)$ (356,250)$
Operating income 540,000$ 418,750$
Other revenue 60,000 50,000
Income before income tax expense 600,000$ 468,750$
Income tax expense (450,000) (375,000)
Net income 150,000$ 93,750$
2.
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Problem 14-2A
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Key Code:
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Tri-Comic Company
Comparative Income Statement
For the Years Ended December 31, 20Y2 and 20Y1
20Y2
20Y1
[Key essay answer here]
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1.
Amount Percent Amount Percent
Sales 1,500,000$ 100.0% 1,250,000$ 100.0%
Cost of goods sold (510,000) -34.0% (475,000) -38.0%
Gross profit 990,000$ 66.0% 775,000$ 62.0%
Selling expenses (270,000)$ -18.0% (200,000)$ -16.0%
Administrative expenses (180,000) -12.0% (156,250) -12.5%
Total operating expenses (450,000)$ -30.0% (356,250)$ -28.5%
Operating income 540,000$ 36.0% 418,750$ 33.5%
Other revenue 60,000 4.0% 50,000 4.0%
Income before income tax expense 600,000$ 40.0% 468,750$ 37.5%
Income tax expense (450,000) -30.0% (375,000) -30.0%
Net income 150,000$ 10.0% 93,750$ 7.5%
Tri-Comic Company
Problem 14-2A
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Comparative Income Statement
For the Years Ended December 31, 20Y2 and 20Y1
20Y2
20Y1
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1.
Amount Percent Amount Percent
Sales 1,300,000$ 1,180,000$
Cost of goods sold (682,500) (613,600)
Gross profit 617,500$ 566,400$
Selling expenses (260,000)$ (188,800)$
Administrative expenses (169,000) (177,000)
Total operating expenses (429,000)$ (365,800)$
Operating income 188,500$ 200,600$
Other revenue 78,000 70,800
Income before income tax expense 266,500$ 271,400$
Income tax expense (117,000) (106,200)
Net income 149,500$ 165,200$
2.
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Problem 14-2B
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Fielder Industries Inc.
Comparative Income Statement
For the Years Ended December 31, 20Y2 and 20Y1
20Y2
20Y1