Vertical analysis of income statement Obj. 2 Revenue and expense data for Innovation Quarter Inc. for two recent years are as follows:

Current Year Previous Year Sales $4,000,000 $3,600,000 Cost of goods sold 2,280,000 1,872,000 Selling expenses 600,000 648,000 Administrative expenses 520,000 360,000 Income tax expense 240,000 216,000

a. Prepare an income statement in comparative form, stating each item for both years as a percent of sales. Round to the nearest whole percentage.

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

AppendixLO1