Horizontal Analysis of Income Statement For 20Y2, McDade Company reported a decline in net income. At the
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Question:
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 | $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 ?
Related Book For
Managerial Accounting
ISBN: 978-1337270595
14th edition
Authors: Carl S. Warren, James M. Reeve, Jonathan Duchac
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