Sanborn Corporation’s condensed comparative income statements for 20x8 and 20x7 appear below. The corporation’s condensed comparative balance sheets for 20x8 and 20x7 appear on the next page.

Required 1. Prepare schedules showing the amount and percentage changes from 20x7 to 20x8 for the comparative income statements and the balance sheets.
2. Prepare common-size income statements and balance sheets for 20x7 and 20x8.

3. User Insight: Comment on the results in requirements 1 and 2 by identifying favorable and unfavorable changes in the components and composition of the statements.

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Sanborn Corporation Comparative Income Statements For the Years Ended December 31, 20x8 and 20x7 Net sales Cost of goods sold Gross margin 20x8 20x7 $3,276,800 $3,146,400 2,088,800 2,008,400 $1,188,000 $1,138,000 Operating expenses Selling expenses Administrative expenses Total operating expenses Income from operations Interest expense Income before income taxes Income taxes expense Net income Earnings per share $ 476,800 $ 518,000 423,200 447,200 $ 924,000 $ 941,200 $ 264,000 $ 196,800 65,600 39,200 $ 198,400 $ 157,600 62,400 $ 136,000 $ 3.40 $ 56,800 $ 100,800 2.52