26 Vertical Analysis of Income StatementFor 20Y2, Fielder Industries Inc. initiated a sales promotion campaign that included the expenditure of an additional $40,000 for advertising. At the end of the year, Leif Grando,the president, is presented with the following condensed comparative income statement:Fielder Industries Inc.Comparative Income StatementFor the Years Ended December 31, 20Y2 and 20Y120Υ220Υ1Sales$1,300,000$1,180,000Cost of goods sold(682,500)(613,600)Gross profit$617,500$566,400Selling expenses$(260,000)$(188,800)Administrative expenses(169,000)(177,000)Total operating expenses$(429,000)$(365,800)Operating income$188,500$200,600Other revenue78,000· 70,800Income before income tax expensa$266,500$271,400Income tax expense(117,000)(106,200)Net income$149,500$165,200Required:1. Prepare a comparative income statement for the two-year period, presenting an analysis of each item in relationship to sales for each of the years. Round to one decimal place. For those boxes in which you must enter subtracted or negative numbers use a minus sign.Fielder Industries Inc.Comparative Income StatementFor the Years Ended December 31, 20Y2 and 20Y120Υ220Y220Υ120Υ1AmountPercentAmount PercentSales$1,300,000% $1,180,000%Cost of goods sold(682,500)(613,600)%Gross profit$617,500%$566,400%Selling expenses$(260,000)%(188,800)%Administrative expenses(169,000)%(177,000)%Total operating expenses$(429,000)% $(365,800)%Operating income$188,500$200,600%78,000%70,800%Other revenueIncome before income tax expense$266,500%$271,400%(117,000)%(106,200)%Income tax expense$149,500%$165,200%Net incomeAll the costs and expenses, other than selling expenses, have maintained their approximate cost as a. Apparently, the new advertising campaign2. The net income as a percent of sales haspercent of sales relationship between 20Y1 and 20Y2. Selling expenses as a percent of sales, however, have- produced sufficient sales to maintain relative profitability. Thus, selling expenses as abeen successful. The increased expensePreviousNext

Vertical analysis: It is a method of analyzing the financial statement in which each item is shows…

For 20Y2, Fielder Industries Inc. initiated a sales promotion campaign that included the expenditure of an additional $40,000 for advertising. At the end of the year, Leif Grando, the president, is presented with the following condensed comparative income statement: Fielder Industries Inc. Comparative Income Statement For the Years Ended December 31, 20Y2 and 20Y1 20Υ2 20Υ1 Sales $1,300,000 $1,180,000 Cost of goods sold (682,500) (613,600) Gross profit $617,500 $566,400 Selling expenses $(260,000) $(188,800) Administrative expenses (169,000) (177,000) Total operating expenses $(429,000) $(365,800) Operating income $188,500 $200,600 Other revenue 78,000 70,800 Income before income tax expensa $266,500 $271,400 Income tax expense (117,000) (106,200) Net income $149,500 $165,200 Required: 1. Prepare a comparative income statement for the two-year period, presenting an analysis of each item in relationship to sales for each of the years. Round to one decimal