A comparative income statement is given below for McKenzie Sales, Ltd., of Toron

Question

A comparative income statement is given below for McKenzie Sales, Ltd., of Toronto:

Members of the company’s board of directors are surprised to see that net income increased by only $82,100 when sales increased by $1,773,600.

Required:

1. Express each year's income statement in common-size percentages. (Round your percentage answers to 1 decimal place (i.e., 0.1234 should be entered as 12.3).)

McKenzie Sales, Ltd.
Comparative Income Statement This Year Last Year Sales $ 7,390,000 $ 5,616,400 Cost of goods sold 4,790,000 3,507,500 Gross margin 2,600,000 2,108,900 Selling and administrative expenses: Selling expenses 1,390,000 1,081,500 Administrative expenses 706,000 610,500 Total expenses 2,096,000 1,692,000 Net operating income 504,000 416,900 Interest expense 99,000 94,000 Net income before taxes $ 405,000 $ 322,900

Explanation / Answer

Dear Student Thank you for using Chegg Please find below the answer McKenzie Sales, Ltd. Common Size Income Statement Comparative Income Statement Particulars This Year Last Year This Year Last Year Sales           7,390,000.00 5,616,400.00 100.00% 100.00% Cost of goods sold           4,790,000.00 3,507,500.00 64.82% 62.45% Gross margin           2,600,000.00 2,108,900.00 35.18% 37.55% Selling and administrative expenses: Selling expenses           1,390,000.00 1,081,500.00 18.81% 19.26% Administrative expenses               706,000.00      610,500.00 9.55% 10.87% Total expenses           2,096,000.00 1,692,000.00 28.36% 30.13% Net operating income               504,000.00      416,900.00 6.82% 7.42% Interest expense                 99,000.00        94,000.00 1.34% 1.67% Net income before taxes               405,000.00      322,900.00 5.48% 5.75%

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