Vertcal Analysis Two income statements for Fortson Company follow: Fortson Company Income Statements For the Years Ended December 31, 2019 and 2018 2019 2018 Fees earned.. . . . . . . . . . . . . . . . . . . . . $425,000 $375,000 Operating expenses.. . . . . . . . . . . . . [latex]\underline{263,500}[/latex] [latex]\underline{210,000}[/latex] Operating income.. . . . . . . . . . . . . . . [latex]\underline{\$ 161,500}[/latex] [latex]\underline{\$ 165,000}[/latex] a. Prepare a vertical analysis of Fortson Company’s income statements. b. Does the vertical analysis indicate a favorable or an unfavorable trend?

a. Fortson Company Income Statements For the Years Ended December 31, 2019 and 2018 2019 2018 Amount Percent Amount Percent Fees earned .. . . . . . . . . . . . . . . . . . $425,000 100% $375,000 100% Operating expenses.. . . . . . . . . . [latex]\underline{263,500}[/latex] [latex]\underline{62}[/latex] [latex]\underline{210,000}[/latex] [latex]\underline{56}[/latex] Operating income.. . . . . . . . . . . . [latex]\underline{\underline{\$ 161,500} }[/latex] [latex]\underline{\underline{38 }}\%[/latex] [latex]\underline{\underline{\$ 165,000} }[/latex] [latex]\underline{\underline{44 } }\%[/latex] b. An unfavorable trend of increasing operating expenses and decreasing operating income is indicated

Question 3.10: Vertcal Analysis Two income statements for Fortson Company f...

Financial Accounting

Vertcal Analysis

Two income statements for Fortson Company follow:

Fortson Company Income Statements For the Years Ended December 31, 2019 and 2018
	2019	2018
Fees earned.. . . . . . . . . . . . . . . . . . . . .	$425,000	$375,000
Operating expenses.. . . . . . . . . . . . .	$\underline{263,500}$	$\underline{210,000}$
Operating income.. . . . . . . . . . . . . . .	$\underline{\$ 161,500}$	$\underline{\$ 165,000}$

a. Prepare a vertical analysis of Fortson Company’s income statements.
b. Does the vertical analysis indicate a favorable or an unfavorable trend?

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Fortson Company Income Statements For the Years Ended December 31, 2019 and 2018
	2019		2018
	Amount	Percent	Amount	Percent
Fees earned .. . . . . . . . . . . . . . . . . .	$425,000	100%	$375,000	100%
Operating expenses.. . . . . . . . . .	$\underline{263,500}$	$\underline{62}$	$\underline{210,000}$	$\underline{56}$
Operating income.. . . . . . . . . . . .	$\underline{\underline{\$ 161,500} }$	$\underline{\underline{38 }}\%$	$\underline{\underline{\$ 165,000} }$	$\underline{\underline{44 } }\%$