Exercise 13-5 Determination of income effects from common-size and trend percents LO P1, P2

Common-size and trend percents for Rustynail Company's sales, cost of goods sold, and expenses follow.

Common-Size Percents Trend Percents
2017 2016 2015 2017 2016 2015
Sales 100.0 % 100.0 % 100.0 % 105.4 % 104.2 % 100.0 %
Cost of goods sold 63.4 61.9 59.1 113.1 109.1 100.0
Operating expenses 15.3 14.8 15.1 106.8 102.1 100.0

Determine the net income for the following years. (Enter all amounts as positive values.)

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"we first find value of tax in dollars.

the difference between the two prices   is: 23. 54 - 22 = 1.54

therefore the sales tax in dollars is 1.54

the tax % will be   (amount of tax / original cost price ) × 100

(1.54 / 22) × 100  → (0.07) × 100 =   7

so the tax rate is 7%

we can double check the answer.

7 % of 22   → (7/100) × 22 → 0.07 × 22 = 1.54

22 + 1.54 = 23.54"

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