Horizontal Analysis of Income Statement
For 20Y2, 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, 20Y2 and 20Y1 |
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20Y2 | 20Y1 | ||
Sales | $486,592 | $446,000 | |
Cost of goods sold | 336,000 | 280,000 | |
Gross profit | $150,592 | $166,000 | |
Selling expenses | $47,500 | $38,000 | |
Administrative expenses | 28,320 | 24,000 | |
Total operating expenses | $75,820 | $62,000 | |
Income from operations | $74,772 | $104,000 | |
Other income | 2,407 | 1,900 | |
Income before income tax | $77,179 | $105,900 | |
Income tax expense | 21,600 | 31,800 | |
Net income | $55,579 | $74,100 |
Required:
1. Prepare a comparative income statement with horizontal analysis for the two-year period, using 20Y1 as the base year. Use the minus sign to indicate a decrease in the "Difference" columns. If required, round to one decimal place.
McDade Company | ||||
Comparative Income Statement | ||||
For the Years Ended December 31, 20Y2 and 20Y1 | ||||
20Y2 | 20Y1 | Difference - Amount | Difference - Percent | |
Sales | $486,592 | $446,000 | $ | % |
Cost of goods sold | 336,000 | 280,000 | % | |
Gross profit | $150,592 | $166,000 | $ | % |
Selling expenses | $47,500 | $38,000 | $ | % |
Administrative expenses | 28,320 | 24,000 | % | |
Total operating expenses | $75,820 | $62,000 | $ | % |
Income from operations | $74,772 | $104,000 | $ | % |
Other income | 2,407 | 1,900 | % | |
Income before income tax | $77,179 | $105,900 | $ | % |
Income tax expense | 21,600 | 31,800 | % | |
Net income | $55,579 | $74,100 | $ | % |
2. Net income has from 20Y1 to 20Y2. Sales have ; however, the cost of goods sold has , causing the gross profit to .
Horizontal Analysis of Income Statement For 20Y2, McDade Company reported a decline in net income. At...
Horizontal Analysis of Income Statement For 20Y2, 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, 20Y2 and 20Y1 20Y2 20Y1 Sales $352,096 $294,000 Cost of goods sold 266,000 190,000 Gross profit $86,096 $104,000 Selling expenses $37,500 $25,000 Administrative expenses 21,760 16,000 Total operating expenses $59,260 $41,000 Income from operations $26,836...
Horizontal Analysis of Income Statement For 20Y2, 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, 20Y2 and 20Y1 20Y2 20Y1 Sales $647,570 $551,000 Cost of goods sold 476,000 350,000 Gross profit $171,570 $201,000 Selling expenses $66,700 $46,000 Administrative expenses 38,400 29,000 Total operating expenses $105,100 $75,000 Income from operations $66,470...
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