For 20Y2, McDade Company reported a decline in net income. At the end of the year, T. Burrows, the president, is presented with the following condensed comparative income statement: McDade Company Comparative Income Statement For the Years Ended December 31, 20Y2 and 20Y1 20Y2 20Y1 Sales $ 16,800,000 $ 15,000,000 Cost of goods sold (11,500,000) (10,000,000) Gross profit $ 5,300,000 $ 5,000,000 Selling expenses $ (1,770,000) $ (1,500,000) Administrative expenses (1,220,000) (1,000,000) Total operating expenses $ (2,990,000) $ (2,500,000) Operating income $ 2,310,000 $ 2,500,000 Other revenue 256,950 225,000 Income before income tax expense $ 2,566,950 $ 2,725,000 Income tax expense (1,413,000) (1,500,000) Net income $ 1,153,950 $ 1,225,000 1. Prepare a comparative income statement with horizontal analysis for the two-year period, using 20Y1 as the base year. Round percentages to one decimal place. For those boxes in which you must enter subtracted or negative numbers use a minus sign.
For 20Y2, McDade Company reported a decline in net income. At the end of the year, T. Burrows, the president, is presented with the following condensed comparative income statement: McDade Company Comparative Income Statement For the Years Ended December 31, 20Y2 and 20Y1 20Y2 20Y1 Sales $ 16,800,000 $ 15,000,000 Cost of goods sold (11,500,000) (10,000,000) Gross profit $ 5,300,000 $ 5,000,000 Selling expenses $ (1,770,000) $ (1,500,000) Administrative expenses (1,220,000) (1,000,000) Total operating expenses $ (2,990,000) $ (2,500,000) Operating income $ 2,310,000 $ 2,500,000 Other revenue 256,950 225,000 Income before income tax expense $ 2,566,950 $ 2,725,000 Income tax expense (1,413,000) (1,500,000) Net income $ 1,153,950 $ 1,225,000 1. Prepare a comparative income statement with horizontal analysis for the two-year period, using 20Y1 as the base year. Round percentages to one decimal place. For those boxes in which you must enter subtracted or negative numbers use a minus sign.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Horizontal analysis of income statement
For 20Y2, McDade Company reported a decline in net income. At the end of the year, T. Burrows, the president, is presented with the following condensed comparative income statement:
| McDade Company | ||
| Comparative Income Statement | ||
| For the Years Ended December 31, 20Y2 and 20Y1 | ||
| 20Y2 | 20Y1 | |
| Sales | $ 16,800,000 | $ 15,000,000 |
| Cost of goods sold | (11,500,000) | (10,000,000) |
| Gross profit | $ 5,300,000 | $ 5,000,000 |
| Selling expenses | $ (1,770,000) | $ (1,500,000) |
| Administrative expenses | (1,220,000) | (1,000,000) |
| Total operating expenses | $ (2,990,000) | $ (2,500,000) |
| Operating income | $ 2,310,000 | $ 2,500,000 |
| Other revenue | 256,950 | 225,000 |
| Income before income tax expense | $ 2,566,950 | $ 2,725,000 |
| Income tax expense | (1,413,000) | (1,500,000) |
| Net income | $ 1,153,950 | $ 1,225,000 |
1. Prepare a comparative income statement with horizontal analysis for the two-year period, using 20Y1 as the base year. Round percentages to one decimal place. For those boxes in which you must enter subtracted or negative numbers use a minus sign.
Transcribed Image Text:1. Prepare a comparative income statement with horizontal analysis for the two-year period, using 20Y1 as the base year. Round percentages to one decimal place. For those boxes
in which you must enter subtracted or negative numbers use a minus sign.
McDade Company
Sales
Cost of goods sold
Gross profit
Selling expenses
Comparative Income Statement
For the Years Ended December 31, 20Y2 and 20Y1
Administrative expenses
Total operating expenses
Operating income
Other revenue
Income before income tax expense
Income tax expense
Net income
$
20Y2
20Y1
Increase/(Decrease)
Amount
Percent
%
%
%
%
%
%
%
%
%
%
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