Exercise 14-1 (Algo) Common-Size Income Statement [LO14-1] 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: Selling expenses Administrative expenses Total expenses Net operating income Interest expense Net income before taxes This Year $ 7,300,000 4,660,000 2,640,000 1,379,000 711,500 2,090,500 549,500 102,000 $ 447,500 Last Year $ 5,548,000 3,509,000 2,039,000 1,081,000 614,000 1,695,000 344,000 85,000 $ 259,000

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Chapter1: Financial Statements And Business Decisions
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Exercise 14-1 (Algo) Common-Size Income Statement [LO14-1]
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:
Selling expenses
Administrative expenses
Total expenses
Net operating income
Interest expense
Net income before taxes
Sales
Cost of goods sold
Gross margin
Selling and administrative expenses:
Selling expenses
Administrative expenses
Total selling and administrative expenses
Net operating income
Interest expense
Net income before taxes
Members of the company's board of directors are surprised to see that net income increased by only $188,500 when sales increased
by $1,752,000.
This Year
This Year
$ 7,300,000
4,660,000
2,640,000
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).)
%
%
0.0 %
1,379,000
711,500
2,090,500
549,500
102,000
$ 447,500
%
%
0.0 %
0.0 %
%
0.0 %
Last Year
Last Year
$5,548,000
3,509,000
2,039,000
%
%
0.0 %
1,081,000
614,000
1,695,000
344,000
85,000
$ 259,000
%
%
0.0 %
0.0 %
%
0.0 %
Transcribed Image Text:Exercise 14-1 (Algo) Common-Size Income Statement [LO14-1] 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: Selling expenses Administrative expenses Total expenses Net operating income Interest expense Net income before taxes Sales Cost of goods sold Gross margin Selling and administrative expenses: Selling expenses Administrative expenses Total selling and administrative expenses Net operating income Interest expense Net income before taxes Members of the company's board of directors are surprised to see that net income increased by only $188,500 when sales increased by $1,752,000. This Year This Year $ 7,300,000 4,660,000 2,640,000 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).) % % 0.0 % 1,379,000 711,500 2,090,500 549,500 102,000 $ 447,500 % % 0.0 % 0.0 % % 0.0 % Last Year Last Year $5,548,000 3,509,000 2,039,000 % % 0.0 % 1,081,000 614,000 1,695,000 344,000 85,000 $ 259,000 % % 0.0 % 0.0 % % 0.0 %
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