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    Income Statement and Vertical Analysis of the Statement

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    Worry Company sells office supplies. The following information summarizes Best's operating activities for 2014:

    Utilities for store $6,000
    Rent for store $8,000
    Sales commissions $4,500
    Purchases of merchandise $54,000
    Inventory on January 1, 2012 $30,000
    Inventory on December 31, 2012 $20,500
    Sales revenue $108,000

    Required: Prepare an income statement for Worry Company, a merchandiser, for the year ended December 31, 2014 using the format below. Please include a vertical analysis rounded to the nearest tenth of a percent.

    Sales revenue
    Cost of goods sold
    Beginning inventory
    Cost of goods available for sale
    Ending inventory
    Cost of goods sold
    Gross profit
    Selling expenses
    Sales commissions
    General expenses
    Rent expense
    Utilities expense
    Total operating expenses
    Net income/(loss)

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    Solution Preview

    Sales revenue $108,000 100.0%
    Cost of goods sold
    Beginning inventory $30,000
    Purchases 54,000
    Cost of ...

    Solution Summary

    The income statement and vertical analysis of the statement is given. Inventory on December are given.