Question

Horizontal Analysis of Income Statement For 2012, McDade Company reported a decline in net income. At the end of the year, T. Burrows, the president, is presented with the following condensed comparative income statement: McDade Company Comparative Income Statement For the Years Ended December 31, 2012 and 2041 2012 2011 Sales $341,120 $304,000 Cost of goods sold 239.400 190,000 Gross profit $101.720 $114,000 Selling expenses $34,450 19,740 $26,000 16,000 Administrative expenses $54,190 $42.000 Total operating expenses Income from operations $47,530 $72,000 Other revenue 1,664 1,300 Income before income tax $49,194 13,800 $35,394 $73,300 22,000 Income tax expense Net income $51,300 Required:

Answer 1

Answer

--Requirement 1

McDade Company
Comparative Income Statement
For the Years Ended December 31, 20Y2 and 20Y1
	20Y2	20Y1	Difference - Amount: Increase (Decrease)	Difference - Percent
Sales	$341,120	$304,000	$37,120	12.2%
Cost of goods sold	$239,400	$190,000	$49,400	26.0%
Gross profit	$101,720	$114,000	($12,280)	-10.8%
Selling expenses	$34,450	$26,000	$8,450	32.5%
Administrative expenses	$19,740	$16,000	$3,740	23.4%
Total operating expenses	$54,190	$42,000	$12,190	29.0%
Income from operations	$47,530	$72,000	($24,470)	-34.0%
Other revenue	$1,664	$1,300	$364	28.0%
Income before income tax	$49,194	$73,300	($24,106)	-32.9%
Income tax expense	$13,800	$22,000	($8,200)	-37.3%
Net income	$35,394	$51,300	($15,906)	-31.0%