Raymond, Inc. a manufacturer of piping for the plumbing industry, had the following financial performance for the last two years as shown on their income statements below: Raymond, Inc. Comparative Income Statement For the Years Ended December 31, 2021 and 2020 2021 2020 Amount Amount Sales $910,000 $700,000 Cost of goods sold 475,000 350,000 Gross profit 435,000 350,000 Selling expenses 146,500 115,000 Administrative expenses 99,500 85,000 Total operating expenses 246,000 200,000 Income from operations 189,000 150,000 Other income 65,000 50,000 Income before income tax 254,000 200,000 Income tax expense 63,000 50,000 Net income $191,000 $150,000 1. Prepare a horizontal analysis using the form provided to the right. 2. What line item jumps off the page as the most negative change year to year considering the sales growth? 3. What line item jumps off the page as the most positive change year to year considering the sales growth?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Raymond, Inc. a manufacturer of piping for the plumbing industry, had the following
financial performance for the last two years as shown on their income statements below:

Raymond, Inc.
Comparative Income Statement
For the Years Ended December 31, 2021 and 2020
		2021	2020
		Amount	Amount
	Sales	$910,000	$700,000
	Cost of goods sold	475,000	350,000
	Gross profit	435,000	350,000
	Selling expenses	146,500	115,000
	Administrative expenses	99,500	85,000
	Total operating expenses	246,000	200,000
	Income from operations	189,000	150,000
	Other income	65,000	50,000
	Income before income tax	254,000	200,000
	Income tax expense	63,000	50,000
	Net income	$191,000	$150,000


1. Prepare a horizontal analysis using the form provided to the right.
2. What line item jumps off the page as the most negative change year to year
considering the sales growth?
3. What line item jumps off the page as the most positive change year to year
considering the sales growth?

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