Horizontal Analysis of the Income Statement Income statement data for Boone Comp

Question

Horizontal Analysis of the Income Statement Income statement data for Boone Company for the years ended December 31, 20YS and 20Y4, are as follows 20YS 20Y4 Sales Cost of goods sold Gross profit Selling expenses Administrative expenses Total operating expenses Income before income tax Income tax expenses Net income $889,000 744,000) $145,000 $(42,120) (37,500) $(79,620) $65,380 (26,200) $39,180 $700,000 (600,000) $100,000 $(36,000) (30,000) $(66,000) $34,000 (13,600) $20,400 a. Prepare a comparative income statement with horizontal analysis, indicating the increase (decrease) for 20Y5 when compared with 20Y4. Round percentage answers to one decimal place

Explanation / Answer

20y5 20Y4 increase incerase (Decrease) decrease(%_ Sales 889,000 700,000 189,000 27.0% cost of goods sold -744,000 -600,000 144000 24.0% Gross profit 145,000 100,000 45,000 45.0% Sellinge xpense -42,120 -36,000 6120 17.0% Administrative expense -37,500 -30,000 7,500 25.0% total operating expense -79,620 -66,000 13620 20.6% income before income tax 65,380 34,000 31380 92.3% income tax expense -26,200 -13,600 12600 92.6% net income 39,180 20,400 18780 92.1%

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