Problem - According to the producer price index database maintained by the Bureau of Labor Statistics, the average cost of computer equipment fell 8.1 percent between 2012 and 2013.
Required: Conduct a horizontal analysis by calculating the year-over-year changes in each line item, expressed in dollars and in percentages for the income statement of Computer Tycoon Inc. for the year ended December 31, 2013.
|
COMPUTER TYCOON, INC., Income Statements For the Year Ended December 31
|
|
|
2013
|
2012
|
|
Sales Revenue
|
$110,000
|
$135,000
|
|
Cost of Goods Sold
|
65,000
|
75,500
|
|
Gross Profit
|
45,000
|
59,500
|
|
Selling, General, and Administrative Expenses
|
37,000
|
39,000
|
|
Interest Expenses
|
600
|
525
|
|
Income before Income Tax Expense
|
7,400
|
19,975
|
|
Income Tax Expense
|
1,500
|
6,000
|
|
Net Income
|
$5,900
|
$13,975
|