Refer to the information for Cuneo Company above.Required:1. Prepare a common-size income statement for Year 2 by expressing each line item for Year2 as a percentage of that same line item from Year 1. (Note: Round percentages to thenearest tenth of a percent.)2. Prepare a common-size income statement for Year 3 by expressing each line item for Year3 as a percentage of that same line item from Year 1. (Note: Round percentages to thenearest tenth of a percent.) Cunco Company's income statements for the last 3 ycars are as follows:Cunco CompanyIncome StatementsFor the Years 1, 2, and 3Year 1Year 2Year 3$ 1,700,000(1,000,000)$ 700,000Sales$1,000,000$1,200,000Less: Cost of goods soldGross margin(700,000)$ 300,000(700,000)$ 500,000Less operating expenses:Selling expenses(150,000)(50,000)$ 100,000(25,000)$ 75,000(250,000)(220,000)(60,000)$ 220,000(25.000)$ 195,000(120,000)$ 330,000Administrative expensesOperating incomeLess: Interest expenseIncome before taxes(25,000)$ 305,000

A common-size income statement seems to be one where every line item is stated as a percentage of a…

Answered: Cunco Company's income statements for…

Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter15: Financial Statement Analysis

Section: Chapter Questions

Problem 38E: Sundahl Companys income statements for the past 2 years are as follows: Refer to the information for...

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Refer to the information for Cuneo Company above.
Required:
1. Prepare a common-size income statement for Year 2 by expressing each line item for Year
2 as a percentage of that same line item from Year 1. (Note: Round percentages to the
nearest tenth of a percent.)
2. Prepare a common-size income statement for Year 3 by expressing each line item for Year
3 as a percentage of that same line item from Year 1. (Note: Round percentages to the
nearest tenth of a percent.)

Cunco Company's income statements for the last 3 ycars are as follows:
Cunco Company
Income Statements
For the Years 1, 2, and 3
Year 1
Year 2
Year 3
$ 1,700,000
(1,000,000)
$ 700,000
Sales
$1,000,000
$1,200,000
Less: Cost of goods sold
Gross margin
(700,000)
$ 300,000
(700,000)
$ 500,000
Less operating expenses:
Selling expenses
(150,000)
(50,000)
$ 100,000
(25,000)
$ 75,000
(250,000)
(220,000)
(60,000)
$ 220,000
(25.000)
$ 195,000
(120,000)
$ 330,000
Administrative expenses
Operating income
Less: Interest expense
Income before taxes
(25,000)
$ 305,000

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