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 $816,816 $741,000 Cost of merchandise sold 573,400 470,000 Gross profit $243,416 $271,000 Selling expenses $79,050 $62,000 Administrative expenses 46,720 39,000 Total operating expenses $125,770 $101,000 Income from operations $117,646 $170,000 Other revenue 3,894 3,100 Income before income tax expense $121,540 $173,100 Income tax expense 34,000 51,900 Net income $87,540 $121,200
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 $816,816 $741,000 Cost of merchandise sold 573,400 470,000 Gross profit $243,416 $271,000 Selling expenses $79,050 $62,000 Administrative expenses 46,720 39,000 Total operating expenses $125,770 $101,000 Income from operations $117,646 $170,000 Other revenue 3,894 3,100 Income before income tax expense $121,540 $173,100 Income tax expense 34,000 51,900 Net income $87,540 $121,200
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
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 | $816,816 | $741,000 | |
Cost of merchandise sold | 573,400 | 470,000 | |
Gross profit | $243,416 | $271,000 | |
Selling expenses | $79,050 | $62,000 | |
Administrative expenses | 46,720 | 39,000 | |
Total operating expenses | $125,770 | $101,000 | |
Income from operations | $117,646 | $170,000 | |
Other revenue | 3,894 | 3,100 | |
Income before income tax expense | $121,540 | $173,100 | |
Income tax expense | 34,000 | 51,900 | |
Net income | $87,540 | $121,200 |
![### McDade Company
#### Comparative Income Statement for the Years Ended December 31, 20Y2 and 20Y1
| Description | 20Y2 | 20Y1 | Difference - Amount | Difference - Percent |
|---------------------------------|---------------|---------------|---------------------|----------------------|
| **Sales** | $816,816 | $741,000 | | |
| **Cost of Merchandise Sold** | 573,400 | 470,000 | | |
| **Gross Profit** | 243,416 | 271,000 | | |
| **Selling Expenses** | 79,050 | 62,000 | | |
| **Administrative Expenses** | 46,720 | 39,000 | | |
| **Total Operating Expenses** | 125,770 | 101,000 | | |
| **Income from Operations** | 117,646 | 170,000 | | |
| **Other Revenue** | 3,894 | 3,100 | | |
| **Income Before Income Tax Exp.** | 121,540 | 173,100 | | |
| **Income Tax Expense** | 34,000 | 51,900 | | |
| **Net Income** | 87,540 | 121,200 | | |
1. **Instructions for Analysis:**
- 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.
- Use the minus sign to indicate a decrease in the "Difference" columns.
2. **Analysis Conclusion:**
- Net income has [blank] from 20Y1 to 20Y2.
- Sales have [blank], however, the cost of merchandise sold has [blank], causing the gross profit to [blank].
This table provides a detailed financial comparison of McDade Company's performance over two years, highlighting the differences in sales, expenses, and income to aid in strategic decision-making.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fafc75c11-f74c-4700-aac3-dcc346278078%2F80a187e7-10bd-402f-8122-ceb7f568370f%2Ft4kioqo_processed.png&w=3840&q=75)
Transcribed Image Text:### McDade Company
#### Comparative Income Statement for the Years Ended December 31, 20Y2 and 20Y1
| Description | 20Y2 | 20Y1 | Difference - Amount | Difference - Percent |
|---------------------------------|---------------|---------------|---------------------|----------------------|
| **Sales** | $816,816 | $741,000 | | |
| **Cost of Merchandise Sold** | 573,400 | 470,000 | | |
| **Gross Profit** | 243,416 | 271,000 | | |
| **Selling Expenses** | 79,050 | 62,000 | | |
| **Administrative Expenses** | 46,720 | 39,000 | | |
| **Total Operating Expenses** | 125,770 | 101,000 | | |
| **Income from Operations** | 117,646 | 170,000 | | |
| **Other Revenue** | 3,894 | 3,100 | | |
| **Income Before Income Tax Exp.** | 121,540 | 173,100 | | |
| **Income Tax Expense** | 34,000 | 51,900 | | |
| **Net Income** | 87,540 | 121,200 | | |
1. **Instructions for Analysis:**
- 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.
- Use the minus sign to indicate a decrease in the "Difference" columns.
2. **Analysis Conclusion:**
- Net income has [blank] from 20Y1 to 20Y2.
- Sales have [blank], however, the cost of merchandise sold has [blank], causing the gross profit to [blank].
This table provides a detailed financial comparison of McDade Company's performance over two years, highlighting the differences in sales, expenses, and income to aid in strategic decision-making.
Expert Solution
![](/static/compass_v2/shared-icons/check-mark.png)
Step 1
Answer:
1.
20Y2 | 20Y1 | Difference amount | Diffe % | ||
Sales | $816,816 | $741,000 | $75,816 | 10% | |
Cost of merchandise sold | 573,400 | 470,000 | $103,400 | 22% | |
Gross profit | $243,416 | $271,000 | ($27,584) | -10% | |
Selling expenses | $79,050 | $62,000 | $17,050 | 28% | |
Administrative expenses | 46,720 | 39,000 | $7,720 | 20% | |
Total operating expenses | $125,770 | $101,000 | $24,770 | 25% | |
Income from operations | $117,646 | $170,000 | ($52,354) | -31% | |
Other revenue | 3,894 | 3,100 | $794 | 26% | |
Income before income tax expense | $121,540 | $173,100 | ($51,560) | -30% | |
Income tax expense | 34,000 | 51,900 | ($17,900) | -34% | |
Net income | $87,540 | $121,200 | ($33,660) | -28% |
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