Question

just need help figuering out the percentage and part b

Vertical Analysis of Income Statement Revenue and expense data for Innovation Quarter Inc. for two recent years are as follows: Current Year Previous Year Sales $405,000 $352,000 Cost of goods sold 275,400 221,760 Selling expenses 52,650 52,800 Administrative expenses 56,700 45,760 Income tax expense 8,100 14,080 a. Prepare an income statement in comparative form, stating each item for both years as a percent of sales. If required, round percentages to one decimal place. Enter all amounts as positive numbers. Innovation Quarter Inc. Comparative Income Statement For the Years Ended December 31 Current year Current year Previous year Amount Percent Amount $405,000 100% $352,000 275,400 221,760 Previous year Percent Sales Cost of goods sold Gross profit $ 129,600 $ 130,240 52,650 52,800 Selling expenses Administrative expenses 56,700 45,760

Answer 1

a)
Innovation Quarter Inc.
Comparative Income Statement
For the Years Ended December 31.
	Current Year Amount	Current Year Percent	Previous Year Amount	Previous Year Percent
Sales ($405,000/$405,000*100); ($352,000/$352,000*100)	$405,000	100%	$352,000	100%
Less: Cost of Goods Sold ($275,400/$405,000*100); ($221,760/$352,000*100)	$275,400	68.0%	$221,760	63.0%
Gross Profit ($129,600/$405,000*100); ($130,240/$352,000*100)	$129,600	32.0%	$130,240	37.0%
Less: Selling Expenses ($52,650/$405,000*100); ($52,800/$352,000*100)	$52,650	13.0%	$52,800	15.0%
Less: Administrative Expenses ($56,700/$405,000*100); ($45,760/$352,000*100)	$56,700	14.0%	$45,760	13.0%
Total Operating Expenses ($109,350/$405,000*100); ($98,560/$352,000*100)	$109,350	27.0%	$98,560	28.0%
Income from Operations ($20,250/$405,000*100); ($31,680/$352,000*100)	$20,250	5.0%	$31,680	9.0%
Less: Income Tax Expense ($8,100/$405,000*100); ($14,080/$352,000*100)	$8,100	2.0%	$14,080	4.0%
Net Income ($12,150/$405,000*100); ($17,600/$352,000*100)	$12,150	3.0%	$17,600	5.0%
b)
Cost of Goods sold as a percent of sales Increases by 5 percentage points (63% - 68% = 5%) from previous year to current year.
While selling expenses Decreases by 2 percentage points (15% - 13% = 2%) from previous year to current year.
Administrative expenses Increases by 1 percenage points (13% - 14% = 1%) from previous year to current year.
Thus, net income as a percent of sales Decreases by 2 percentage points (5% - 3%) from previous year to current year.