Perform a vertical analysis for the entry "Gross Sales" on the portion of an income statement shown below. (Round to the nearest tenth) $$\begin{array} { l l }
\text { Revenue } & \
\text { Gross Sales } & \$ 320,000 \
\text { Less: Sales returns and Allowances } & 15,000 \
\text { Net Sales } & 305,000 \
\text { Operating Expenses } & \
\text { Salaries and Benefits } & 100,700 \
\text { Rent and Utilities } & 25,400 \
\text { Advertising and Promotions } & 2,380 \
\text { Insurance } & 2,700 \
\text { Miscellaneous Expenses } & 19,395 \
\text { Total Operating Expenses } & \$ 150,575 \
\hline
\end{array}$$
A) 104.9%
B) 103.6%
C) 95.3%
D) 58.6%

Question

Perform a vertical analysis for the entry "Gross Sales" on the portion of an income statement shown below. (Round to the nearest tenth) $$\begin{array} { l l } 
\text { Revenue } & \
\text { Gross Sales } & \$ 320,000 \
\text { Less: Sales returns and Allowances } & 15,000 \
\text { Net Sales } & 305,000 \
\text { Operating Expenses } & \
\text { Salaries and Benefits } & 100,700 \
\text { Rent and Utilities } & 25,400 \
\text { Advertising and Promotions } & 2,380 \
\text { Insurance } & 2,700 \
\text { Miscellaneous Expenses } & 19,395 \
\text { Total Operating Expenses } & \$ 150,575 \
\hline
\end{array}$$
A) 104.9%
B) 103.6%
C) 95.3%
D) 58.6%

Quizplus · Accepted Answer

Vertical analysis involves expressing each item in the income statement as a percentage of a base figure, typically net sales. Gross Sales is $320,000 and Net Sales is $305,000. The vertical analysis percentage for Gross Sales is calculated as ($320,000 / $305,000) * 100 = 104.9%.

Perform a Vertical Analysis for the Entry "Gross Sales" on the Portion