A comparative income statement is given below for McKenzie Sales, Limited, of Toronto: McKenzie Sales, Limited Comparative Income Statement Sales Cost of goods sold Gross margin Selling and administrative expenses: Administrative expenses Selling expenses Total expenses Net operating income Interest expense Net income before taxes This Year $ 7,310,000 4,620,000 2,690,000 Last Year $ 5,555,600 3,515,500 2,040,100 1,386,000 1,079,500 709,500 611,000 2,095,500 1,690,500 594,500 98,000 $ 496,500 349,600 91,000 $ 258,600 Members of the company's board of directors are surprised to see that net income increased by only $237,900 when sales increased by $1,754,400. 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).) × Answer is complete but not entirely correct. This Year Last Year Sales 100.0 % 100.0 % Cost of goods sold 63.5 % 63.2 % Gross margin 36.5 % 36.8 % Selling and administrative expenses: Selling expenses 18.9 × % 19.3 % Administrative expenses 9.7 % 11.0 % Total selling and administrative expenses 28.6 % 30.3 % Net operating income 7.9 % 6.5 % Interest expense 1.4 × % 1.6 % Net income before taxes 6.5 % 4.9 %
A comparative income statement is given below for McKenzie Sales, Limited, of Toronto: McKenzie Sales, Limited Comparative Income Statement Sales Cost of goods sold Gross margin Selling and administrative expenses: Administrative expenses Selling expenses Total expenses Net operating income Interest expense Net income before taxes This Year $ 7,310,000 4,620,000 2,690,000 Last Year $ 5,555,600 3,515,500 2,040,100 1,386,000 1,079,500 709,500 611,000 2,095,500 1,690,500 594,500 98,000 $ 496,500 349,600 91,000 $ 258,600 Members of the company's board of directors are surprised to see that net income increased by only $237,900 when sales increased by $1,754,400. 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).) × Answer is complete but not entirely correct. This Year Last Year Sales 100.0 % 100.0 % Cost of goods sold 63.5 % 63.2 % Gross margin 36.5 % 36.8 % Selling and administrative expenses: Selling expenses 18.9 × % 19.3 % Administrative expenses 9.7 % 11.0 % Total selling and administrative expenses 28.6 % 30.3 % Net operating income 7.9 % 6.5 % Interest expense 1.4 × % 1.6 % Net income before taxes 6.5 % 4.9 %
Chapter6: Merchandising Transactions
Section: Chapter Questions
Problem 22Q: The following is select account information for August Sundries. Sales: $850,360; Sales Returns and...
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Transcribed Image Text:A comparative income statement is given below for McKenzie Sales, Limited, of Toronto:
McKenzie Sales, Limited
Comparative Income Statement
Sales
Cost of goods sold
Gross margin
Selling and administrative expenses:
Administrative expenses
Selling expenses
Total expenses
Net operating income
Interest expense
Net income before taxes
This Year
$ 7,310,000
4,620,000
2,690,000
Last Year
$ 5,555,600
3,515,500
2,040,100
1,386,000
1,079,500
709,500
611,000
2,095,500
1,690,500
594,500
98,000
$ 496,500
349,600
91,000
$ 258,600
Members of the company's board of directors are surprised to see that net income increased by only $237,900 when sales increased
by $1,754,400.
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).)
× Answer is complete but not entirely correct.
This Year
Last Year
Sales
100.0
%
100.0
%
Cost of goods sold
63.5
%
63.2
%
Gross margin
36.5 %
36.8
%
Selling and administrative expenses:
Selling expenses
18.9 × %
19.3
%
Administrative expenses
9.7
%
11.0
%
Total selling and administrative expenses
28.6
%
30.3
%
Net operating income
7.9
%
6.5
%
Interest expense
1.4 × %
1.6
%
Net income before taxes
6.5
%
4.9
%
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