Vertical analysis of income statement For 20Y2, Tri-Comic Company initiated a sales promotion campaign that included the expenditure of an additional $50,000 for advertising. At the end of the year, Lumi Neer, the president, is presented with the following condensed comparative income statement: Tri-Comic Company Comparative Income Statement For the Years Ended December 31, 20Y2 and 20Y1 20Y2 20Y1 Sales $ 1,500,000 $ 1,250,000 Cost of goods sold (510,000) (475,000) Gross profit $ 990,000 $ 775,000 Selling expenses $ (270,000) $ (200,000) Administrative expenses (180,000) (156,250) Total operating expenses $ (450,000) $ (356,250) Operating income $ 540,000 $ 418,750 Other revenue 60,000 50,000 Income before income tax expense $ 600,000 $ 468,750 Income tax expense (450,000) (375,000) Net income $ 150,000 $ 93,750 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 percentages to one decimal place. For those boxes in which you must enter subtracted or negative numbers use a minus sign. Tri-Comic Company Comparative Income Statement For the Years Ended December 31, 20Y2 and 20Y1 20Y2 20Y2 20Y1 20Y1 Amount Percent Amount Percent Sales Cost of goods sold = Gross profit Selling expenses Administrative expenses Total operating expenses Operating income Other revenue Income before income tax expense Income tax expense Net income

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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Vertical analysis of income statement

For 20Y2, Tri-Comic Company initiated a sales promotion campaign that included the expenditure of an additional $50,000 for advertising. At the end of the year, Lumi Neer, the president, is presented with the following condensed comparative income statement:

Tri-Comic Company
Comparative Income Statement
For the Years Ended December 31, 20Y2 and 20Y1
	20Y2	20Y1
Sales	$ 1,500,000	$ 1,250,000
Cost of goods sold	(510,000)	(475,000)
Gross profit	$ 990,000	$ 775,000
Selling expenses	$ (270,000)	$ (200,000)
Administrative expenses	(180,000)	(156,250)
Total operating expenses	$ (450,000)	$ (356,250)
Operating income	$ 540,000	$ 418,750
Other revenue	60,000	50,000
Income before income tax expense	$ 600,000	$ 468,750
Income tax expense	(450,000)	(375,000)
Net income	$ 150,000	$ 93,750

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 percentages to one decimal place. For those boxes in which you must enter subtracted or negative numbers use a minus sign.

Tri-Comic Company
Comparative Income Statement
For the Years Ended December 31, 20Y2 and 20Y1
	20Y2	20Y2	20Y1	20Y1
	Amount	Percent	Amount	Percent
Sales
Cost of goods sold	=
Gross profit
Selling expenses
Administrative expenses
Total operating expenses
Operating income
Other revenue
Income before income tax expense
Income tax expense
Net income

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