Name:
Section:
Score: 0%
Key Code:
a.
Amount Percent Amount Percent
Sales
Cost of goods sold
b.
Exercise 9-1
Instructions
2
SEARLE TECHNOLOGIES CO.
Comparative Income Statement
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For the Years Ended December 31, 20Y8 and 20Y7
20Y8
20Y7
Instructions
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ON
Exercise 9-1
SOLUTION
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The analysis indicates that the increase in cost of goods sold was partially offset by the decreases in selling, administrative, and
income tax expenses.
SEARLE TECHNOLOGIES CO.
Comparative Income Statement
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For the Years Ended December 31, 20Y8 and 20Y7
20Y8
20Y7
Name:
Section:
Score: 0%
Key Code:
1.
20Y3 20Y2
Amount Amount Amount Percent
Sales 880,000$ 800,000$
Sales returns and allowances 18,000 15,000
Net sales 862,000$ 785,000$
2.
Problem 9-1
Increase (Decrease)
Instructions
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2
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GREYHOUND TECHNOLOGY COMPANY
Comparative Income Statement
For the Years Ended December 31, 20Y3 and 20Y2
Name:
Section:
Score:
Scoring:
1.
20Y3 20Y2
Amount Amount Amount Percent
Sales 880,000$ 800,000$ 80,000$ 10.0%
Sales returns and allowances 18,000 15,000 3,000 20.0%
Net sales 862,000$ 785,000$ 77,000$ 9.8%
Cost of goods sold 650,000 500,000 150,000 30.0%
2.
Net income decreased because sales increased at a smaller percentage rate than did cost of goods sold.
For the Years Ended December 31, 20Y3 and 20Y2
Increase (Decrease)
GREYHOUND TECHNOLOGY COMPANY
Comparative Income Statement
Problem 9-1
SOLUTION
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Instructions
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Name:
Section:
Score: 0%
Key Code:
a.
Amount Percent Amount Percent
Revenues:
Admissions 130,239$ 139,125$
Event-related revenue 163,621 156,691
NASCAR broadcasting revenue 185,394 178,722
Other operating revenue 26,591 27,705
Total revenue 505,845$ 502,243$
b.
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Exercise 9-2
Instructions
2
Comparative Income Statement (in thousands of dollars)
Year 2
Year 1
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SPEEDWAY MOTORSPORTS, INC.
Name:
Section:
Score:
Scoring:
a.
Amount Percent Amount Percent
Revenues:
Admissions 130,239$ 25.7% 139,125$ 27.7%
Event-related revenue 163,621 32.3% 156,691 31.2%
NASCAR broadcasting revenue 185,394 36.7% 178,722 35.6%
Other operating revenue 26,591 5.3% 27,705 5.5%
b.
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Comparative Income Statement (in thousands of dollars)
Year 2
Year 1
The increase in total expenses as a percentage of the total revenue offset the increase in total revenue, largely because of the write-down of goodwill (other expense) during the year.
Exercise 9-2
SOLUTION
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ON
SPEEDWAY MOTORSPORTS, INC.
Instructions
Name:
Section:
Score: 0%
Key Code:
1.
Amount Percent Amount Percent
Sales 1,545,000$ 1,224,000$
Sales returns and allowances 45,000 24,000
Net sales 1,500,000$ 1,200,000$
Cost of goods sold 960,000 780,000
Gross profit 540,000$ 420,000$
2.
BLUE BUFFALO COMPANY
Comparative Income Statement
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For the Years Ended December 31, 20Y6 and 20Y5
20Y6
20Y5
2
Problem 9-2
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Name:
Section:
Score:
Scoring:
1.
Amount Percent Amount Percent
Sales 1,545,000$ 103.0% 1,224,000$ 102.0%
Sales returns and allowances 45,000 3.0% 24,000 2.0%
Net sales 1,500,000$ 100.0% 1,200,000$ 100.0%
Cost of goods sold 960,000 64.0% 780,000 65.0%
2.
Problem 9-2
SOLUTION
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Instructions
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For the Years Ended December 31, 20Y6 and 20Y5
20Y6
20Y5
The analysis indicates that sales, cost of goods sold, selling expenses, and net income all increased as a result of a
successful sales promotion.
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ON
BLUE BUFFALO COMPANY
Comparative Income Statement
Name:
Section:
Score: 0%
Key Code:
a.
Electronics
Industry
Average
Amount Percent
Sales 4,728,800$ 102.5%
Sales returns and allowances 128,800 2.5%
Net sales 4,600,000$ 100.0%
b.
GARRITY ELECTRONICS COMPANY
Common-Size Income Statement
Electronics Company
Garrity
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2
Exercise 9-3
Name:
Section:
Score:
Scoring:
a.
Electronics
Industry
Average
Amount Percent
Sales 4,728,800$ 102.8% 102.5%
Sales returns and allowances 128,800 2.8% 2.5%
Net sales 4,600,000$ 100.0% 100.0%
b.
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Exercise 9-3
SOLUTION
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ON
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Electronics Company
COGS is lower than average, but operating expenses are higher. Overall, the company is less profitable than
average.
Garrity
GARRITY ELECTRONICS COMPANY
Common-Size Income Statement
Name:
Section:
Score: 0%
Key Code:
Amount Percent Amount Percent
Current assets 700,000$ 504,000$
Property, plant, and equipment 945,000 770,000
December 31, 20Y2 and 20Y1
20Y2
20Y1
Instructions
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OTTER CREEK COMPANY
Comparative Balance Sheet
Exercise 9-4
2
Name:
Section:
Score:
Scoring:
Amount Percent Amount Percent
Current assets 700,000$ 40.0% 504,000$ 36.0%
Property, plant, and equipment 945,000 54.0% 770,000 55.0%
Intangible assets 105,000 6.0% 126,000 9.0%
ON
Instructions
Exercise 9-4
SOLUTION
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December 31, 20Y2 and 20Y1
20Y2
20Y1
OTTER CREEK COMPANY
Comparative Balance Sheet
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Name:
Section:
Score: 0%
Key Code:
1. Working capital:
–=
Calculated
Ratio Numerator ÷Denominator Value
2. Current ratio ÷ =
3. Quick ratio ÷ =
4. Accounts receivable turnover ÷ =
8. Ratio of fixed assets to long-term liabilities ÷ =
9. Ratio of liabilities to stockholders’ equity ÷ =
10. Number of times interest charges earned ÷ =
11. Number of times preferred dividends earned ÷ =
16. Earnings per share on common stock ÷ =
17. Price-earnings ratio ÷ =
Problem 9-4
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2
Name:
Section:
Score:
Scoring:
1. Working capital: $965,000
–$200,000 = $765,000
Calculated
Ratio Numerator ÷Denominator Value
2. Current ratio 965,000$ ÷ 200,000$ = 4.8
3. Quick ratio 615,000$ ÷ 200,000$ = 3.1
4. Accounts receivable turnover 1,925,000$ ÷ 175,000$ = 11.0
10. Number of times interest charges earned 570,000$ ÷ 115,000$ = 5.0
11. Number of times preferred dividends earned 364,000$ ÷ 5,000$ = 72.8
12. Ratio of net sales to assets 1,925,000$ ÷ 1,950,000$ = 1.0
13. Rate earned on total assets 479,000$ ÷ 2,200,000$ = 21.8%
14. Rate earned on stockholders’ equity 364,000$ ÷ 890,500$ = 40.9%
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Problem 9-4
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SOLUTION
ON
Name:
Section:
Score: 0%
Key Code:
a.
20Y5 20Y4
Amount Amount Amount Percent
Sales 579,000$ 500,000$
Cost of goods sold 343,500 300,000
b.
Increase (Decrease)
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MONTANA IMAGES COMPANY
Comparative Income Statement
For the Years Ended December 31, 20Y5 and 20Y4
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Exercise 9-5
2
Name:
Section:
Score:
Scoring:
a.
20Y5 20Y4
Amount Amount Amount Percent
Sales 579,000$ 500,000$ 79,000$ 15.8%
b.
ON
Instructions
Exercise 9-5
SOLUTION
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Net income increased because sales increased at a greater percentage rate than did cost of goods sold and
operating expenses.
For the Years Ended December 31, 20Y5 and 20Y4
Increase (Decrease)
MONTANA IMAGES COMPANY
Comparative Income Statement
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Problem 9-3
Name:
Section:
Score: 0%
Key Code:
1.
a. Working Capital = Current Assets
–Current Liabilities
=
–
Working Capital =
Given data:
Call on the following amounts with your
b. Current Assets
formulas:
Current Liabilities
Cash 80,000$
Quick Ratio =
2.
Working Current Quick Current Quick Current
Transaction Capital Ratio Ratio Assets Assets Liabilities
a.
b.
c.
Supporting Calculations
Instructions
1
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Current Ratio
=
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Inventories
Current Ratio
=
=
=
Name:
Section:
Score:
Scoring:
1.
a. Working Capital = Current Assets
–Current Liabilities
=$675,000
–250,000
Working Capital = $425,000
Given data:
Call on the following amounts with your
2.
Working Current Quick Current Quick Current
Transaction Capital Ratio Ratio Assets Assets Liabilities
a. 425,000$ 2.7 1.9 675,000$ 475,000$ 250,000$
b. 425,000 3.0 2.1 635,000 435,000 210,000
Supporting Calculations
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ON
Problem 9-3
SOLUTION
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