Revenue and expense data for Young Technologies Inc. are as follows: Year 2 Year 1 Sales $500,000 $440,000 Cost of goods sold 325,000 242,000 Selling expenses 70,000 79,200 Administrative expenses 75,000 70,400 Income tax expense 10,500 16,400 Required: (a) Prepare an income statement in comparative form, stating each item for both years as an amount and as a percent of sales. Round your percentages answers to one decimal place. Enter all amounts as positive numbers. (b) Comment on the significant changes disclosed by the comparative income statement. Prepare an income statement in comparative form, stating each item for both years as an amount and as a percent of sales. Round your percentages answers to one decimal place. Enter all amounts as positive numbers. Young Technologies Inc. Comparative Income Statement For the Years Ended December 31, Year 2 and Year 1 1 Year 2 Year 2 Year 1 Year 1 2 Amount Percent Amount Percent 3 Sales 4 Cost of goods sold 5 Gross profit 6 Selling expenses 7 Administrative expenses 8 Total expenses 9 Income from operations 10 Income tax expense 11 Net income Comment on the significant changes disclosed by the comparative income statement. The vertical analysis indicates that the cost of goods sold as a percent of sales by 10% between the two years. Selling and administrative expenses as a percentage of sales by 5%, and income tax expense by 2%. Overall, net income as a percent of sales by 3%.

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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Revenue and expense data for Young Technologies Inc. are as follows:

	Year 2	Year 1
Sales	$500,000	$440,000
Cost of goods sold	325,000	242,000
Selling expenses	70,000	79,200
Administrative expenses	75,000	70,400
Income tax expense	10,500	16,400

Required:

(a)

Prepare an income statement in comparative form, stating each item for both years as an amount and as a percent of sales. Round your percentages answers to one decimal place. Enter all amounts as positive numbers.

(b)

Comment on the significant changes disclosed by the comparative income statement.

Young Technologies Inc.

Comparative Income Statement

For the Years Ended December 31, Year 2 and Year 1

1		Year 2	Year 2	Year 1	Year 1
2		Amount	Percent	Amount	Percent
3	Sales
4	Cost of goods sold
5	Gross profit
6	Selling expenses
7	Administrative expenses
8	Total expenses
9	Income from operations
10	Income tax expense
11	Net income

Comment on the significant changes disclosed by the comparative income statement.

The vertical analysis indicates that the cost of goods sold as a percent of sales by 10% between the two years. Selling and administrative expenses as a percentage of sales by 5%, and income tax expense by 2%. Overall, net income as a percent of sales by 3%.

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