On a comparative income statement, gross revenues were $310,000, sales returns and allowances were $14,000 and sales discounts amounted to $2,200. Selling expenses of $54,000 were incurred during the year. The vertical analysis would show current year selling expenses as 18.4%.

Question

Quizplus · Accepted Answer

To calculate the percentage of selling expenses, we need to divide selling expenses by gross revenues minus sales returns and allowances and sales discounts.

Selling expenses: $54,000

Net sales: $310,000 - $14,000 - $2,200 = $293,800

Percentage of selling expenses: ($54,000 / $293,800) x 100% = 18.4%

Therefore, the statement is true.

On a Comparative Income Statement, Gross Revenues Were $310,000, Sales