Question

The following percentages apply to Rundle Company for 2018 and 2019:

	2019				2018
Sales		100.0	%			100.0	%
Cost of goods sold		61.0				63.9
Gross margin		39.0				36.1
Selling and administrative expense		26.4				20.7
Interest expense		2.4				1.9
Total expenses		28.8				22.6
Income before taxes		10.2				13.5
Income tax expense		5.7				7.2
Net income		4.5	%			6.3	%

Required

Assuming that sales were $515,000 in 2018 and $585,000 in 2019, prepare income statements for the two years.

RUNDLE COMPANY
Income Statements
	2019	2018
Sales	$585,000ect	$515,000
Cost of goods sold	not attempted	not attempted
Gross margin	585,000	515,000
Selling and administrative expenses	not attempted	not attempted
Interest expense	not attempted	not attempted
Total expenses	0	0
Income before taxes	not attempted	not attempted
Income tax expense	not attempted	not attempted
Net income	$0	$0

Answer 1

Income Statement for 2018 and 2019 RUNDLE COMPANY INCOME STATEMENT 2019 2018 Sales $585,000 100% $515,000 100.0% Cost of Goods Sold $356,850 61% $329,085.0 63.9% (b) C= (a-b) Gross Margine $228,150 39% $185,915.0 36.1% Selling and Administrative expenses (d) $154,440 26.4% $106,605.0 20.7% Interest Expense $14,040 2.4% $9,785.0 1.9% (e) f=(d+e) Total Expenses 28.8% $116,390.0 22.6% $168,480 $59,670 Income before taxes g= (c-f) 10.2% $69,525.0 13.5% Income tax expenses h $33,345 5.7% $37,080.0 7.2% Net income (g- h) $26,325 4.5% $32,445.0 6.3% * Note: The give percentage of each year is applied on the sales of the given year