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:Please see the attachment for details:Instructions1. 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.2. To the extent the data permit, comment on the significant relationshipsrevealed by the horizontal analysis prepared in (1). McDade CompanyComparative Income StatementFor the Years Ended December 31, 20Y2 and 20Y120Υ220Υ1Sales .....$16,800,000$15,000,000Cost of goods sold.Gross profit .....Selling expenses11,500,00010,000,000$ 5,300,000$ 1,770,000$ 5,000,000$ 1,500,000Administrative expenses.1,220,0001,000,000$ 2,990,000$ 2,310,000$ 2,500,000$ 2,500,000Total operating expensesIncome from operationsOther revenue ...256,950225,000$ 2,566,950$ 2,725,000Income before income tax...Income tax expense1,500,0001,413,000$ 1,153,950$ 1,225,000Net income ..

Answered: McDade Company Comparative 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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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:

Please see the attachment for details:

Instructions
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.
2. To the extent the data permit, comment on the significant relationships
revealed by the horizontal analysis prepared in (1).

McDade Company
Comparative Income Statement
For the Years Ended December 31, 20Y2 and 20Y1
20Υ2
20Υ1
Sales .....
$16,800,000
$15,000,000
Cost of goods sold.
Gross profit .....
Selling expenses
11,500,000
10,000,000
$ 5,300,000
$ 1,770,000
$ 5,000,000
$ 1,500,000
Administrative expenses.
1,220,000
1,000,000
$ 2,990,000
$ 2,310,000
$ 2,500,000
$ 2,500,000
Total operating expenses
Income from operations
Other revenue ...
256,950
225,000
$ 2,566,950
$ 2,725,000
Income before income tax
...
Income tax expense
1,500,000
1,413,000
$ 1,153,950
$ 1,225,000
Net income ..

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