Question

3) The Income Statement for XYZ Company for 2016 and 2017 is as follows: 2017 2016 Sales $4,000,000 $3,500,000 Cost of Goods Sold 2,500,000 2,400,000 Gross Profit 1,500,000 1,100,000 Selling Expense 600,000 700,000 Administrative Expense 200,000 150,000 Total Operating Expense 800,000 850,000 Income from Operations 700,000 250,000 Income Tax Expense 50,000 20,000 Net Income 650,000 230,000 Instructions: Using the above comparative income statement, prepare a horizontal analysis for ABC Company. (10 points)

Answer 1

Answer-3)-

XYZ COMPANY
Comparative Income Statement
HORIZONTAL ANALYSIS
For the Years Ended 2017 and 2016
Particulars	2017	2016	Difference	%
	$	$	$
Sales	4000000	3500000	500000	14.3
Less- Cost of goods sold	2500000	2400000	100000	4.2
Gross profit	1500000	1100000	400000	36.4
Less- Expenses
Selling expenses	600000	700000	-100000	-14.3
Administrative expenses	200000	150000	50000	33.3
Total operating expenses	800000	850000	-50000	-5.9
Income before income tax	700000	250000	450000	180.0
Less- Income tax expense	50000	20000	30000	150.0
Net income	650000	230000	420000	182.6