Assignment Part One - Unit 4[AC499 Bachelors Capstone in...

Unit 4 [ AC499: Bachelor’s Capstone in Accounting ]
Unit 4 Practice Activity: Financial Report
Analysis – Rainbow Paint Co.
Note: This is a practice activity to be performed before completing the Assignment for this unit. Also,
this is the data to be used as the basis for your Unit 9 Final Project. The solutions for the Unit 4
Practice activity are located here .
Rainbow Paint Co.'s comparative financial statements for the years ending December 31,
2013 and 2012 are as follows. The market price of Rainbow Paint Co.'s common stock was
$30 on December 31, 1999 and $25 on December 31, 2013.
Rainbow Paint Co.
Comparative Income Statement
For the Years Ended December 31, 2013 and 2012
2013 2012
Sales $ 5,125,000 $ 3,257,600
Sales returns and allowances 125,000 57,600
Net sales $ 5,000,000 $ 3,200,000
Cost of goods sold 3,400,000 2,080,000
Gross profit $ 1,600,000 $ 1,120,000
Selling expenses 650,000 464,000
Administrative expenses 325,000 224,000
Total operating expenses $ 975,000 $ 688,000
Income from operations $ 625,000 $ 432,000
Other income 25,000 19,200
Income before Interest & Taxes $
650,000
$ 451,200
Other expense (interest) 105,000 64,000
Income before income tax $ 545,000 $ 387,200
Income tax expense 300,000 176,000
Net income $ 245,000
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$ 211,200
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Rainbow Paint Co.