Use the following comparative income statement form to enter amounts you identif

Question

Use the following comparative income statement form to enter amounts you identify from the computations on the Liquidity and Solvency Measures panel and on the Profitability Measures panel. Compute any missing amounts and complete the horizontal analysis columns. Enter percentages as decimal amounts, rounded to one decimal place. When rounding, look only at the figure to the right of one decimal place. If < 5, round down and if 5, round up. For example, for 32.048% enter 32.0%. For 32.058% enter 32.1%.

Comparative Income Statement

For the Years Ended December 31, 20Y6 and 20Y5

1

20Y6

20Y5

Amount Increase (Decrease)

Percentage Increase (Decrease)

2

Sales

$7,257,000.00

3

Cost of goods sold

3,444,000.00

4

Gross profit

$3,813,000.00

5

Selling expenses

$1,451,000.00

6

Administrative expenses

1,237,500.00

1,101,500.00

7

Total operating expenses

$2,552,500.00

8

Income from operations

$1,260,500.00

9

Interest expense

120,600.00

10

Income before income tax

$1,139,900.00

11

Income tax expense

178,200.00

12

Net income

$961,700.00

Comparative Income Statement

For the Years Ended December 31, 20Y6 and 20Y5

Explanation / Answer

Comparative Income Statement 1 20Y6 20Y5 Amount Increase (Decrease) Percentage Increase (Decrease) 2 Sales      8,250,000.00 $7,257,000.00                993,000.00 13.7 3 Cost of goods sold 3,444,000.00 4 Gross profit $3,813,000.00 5 Selling expenses $1,451,000.00 6 Administrative expenses      1,237,500.00 1,101,500.00                136,000.00 12.3 7 Total operating expenses $2,552,500.00 8 Income from operations      1,097,500.00 $1,260,500.00               (163,000.00) -12.9 9 Interest expense         127,000.00 120,600.00                     6,400.00 5.3 10 Income before income tax         970,500.00 $1,139,900.00               (169,400.00) -14.9 11 Income tax expense         184,200.00 178,200.00                     6,000.00 3.4 12 Net income         786,300.00 $961,700.00               (175,400.00) -18.2

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