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FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Horizontal Analysis of Income Statement For 20Y2, Macklin Inc. reported a significant decrease in net income. At the end of the year, John Mayer, the president, is presented with the following condensed comparative income statement: Macklin Inc. Comparative Income Statement For the Years Ended December 31, 20Y2 and 20Y1 20Υ2 20Υ1 Sales $614,597 $551,000 Cost of goods sold (434,000) (350,000) Gross profit $180,597 $201,000 Selling expenses $(59,800) $(46,000) Administrative expenses (35,260) (29,000) Total operating expenses $(95,060) $(75,000) Operating income $85,537 $126,000 Other revenue 2,776 2,300 Income before income tax expense $88,313 $128,300 Income tax expense (24,700) (38,500) Net income $63,613 $89,800 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 Previous Next
Transcribed Image Text:Horizontal Analysis of Income Statement For 20Y2, Macklin Inc. reported a significant decrease in net income. At the end of the year, John Mayer, the president, is presented with the following condensed comparative income statement: Macklin Inc. Comparative Income Statement For the Years Ended December 31, 20Y2 and 20Y1 20Υ2 20Υ1 Sales $614,597 $551,000 Cost of goods sold (434,000) (350,000) Gross profit $180,597 $201,000 Selling expenses $(59,800) $(46,000) Administrative expenses (35,260) (29,000) Total operating expenses $(95,060) $(75,000) Operating income $85,537 $126,000 Other revenue 2,776 2,300 Income before income tax expense $88,313 $128,300 Income tax expense (24,700) (38,500) Net income $63,613 $89,800 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 Previous Next
"Increase/(Decrease)" columns. If required, round percentages to one decimal place. Macklin Inc. Comparative Income Statement For the Years Ended December 31, 20Y2 and 20Y1 Increase/ Increase/ (Decrease) (Decrease) 20Υ2 20Υ1 Amount Percent Sales $614,597 $551,000 $ % Cost of goods sold (434,000) (350,000) % Gross profit $180,597 $201,000 % Selling expenses $(59,800) $(46,000) $ % Administrative expenses (35,260) (29,000) % Total operating expenses $(95,060) $(75,000) % Operating income $85,537 $126,000 % Other revenue 2,776 2,300 % Income before income tak expense $88,313 $128,300 % Income tax expense (24,700) (38,500) % Net income $63,613 $89,800 $ % 2. Net income has from 20Y1 to 20Y2. Sales have ; however, the cost of goods sold has at a faster rate than sales, causing the gross profit to
Transcribed Image Text:"Increase/(Decrease)" columns. If required, round percentages to one decimal place. Macklin Inc. Comparative Income Statement For the Years Ended December 31, 20Y2 and 20Y1 Increase/ Increase/ (Decrease) (Decrease) 20Υ2 20Υ1 Amount Percent Sales $614,597 $551,000 $ % Cost of goods sold (434,000) (350,000) % Gross profit $180,597 $201,000 % Selling expenses $(59,800) $(46,000) $ % Administrative expenses (35,260) (29,000) % Total operating expenses $(95,060) $(75,000) % Operating income $85,537 $126,000 % Other revenue 2,776 2,300 % Income before income tak expense $88,313 $128,300 % Income tax expense (24,700) (38,500) % Net income $63,613 $89,800 $ % 2. Net income has from 20Y1 to 20Y2. Sales have ; however, the cost of goods sold has at a faster rate than sales, causing the gross profit to
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