Current Year		Previous Year
Sales	$515,000		$438,000
Cost of goods sold	288,400		219,000
Selling expenses	92,700		87,600
Administrative expenses	97,850		78,840
Income tax expense	15,450		21,900

Question Content Area

a. Prepare an income statement in comparative form, stating each item for both years as a percent of sales. If required, round percentages to one decimal place. Enter all amounts as positive numbers.

Innovation Quarter Inc. Comparative Income Statement For the Years Ended December 31

	Current year Amount	Current year Percent	Previous year Amount	Previous year Percent
Sales	$515,000	fill in the blank c05b85032fadfac_1%	$438,000	fill in the blank c05b85032fadfac_2%
Cost of goods sold	288,400	fill in the blank c05b85032fadfac_3%	219,000	fill in the blank c05b85032fadfac_4%
Gross profitIncome from operationsNet incomeTotal operating expenses	$- Select -	- Select -%	$- Select -	- Select -%
Selling expenses	92,700	fill in the blank c05b85032fadfac_10%	87,600	fill in the blank c05b85032fadfac_11%
Administrative expenses	97,850	fill in the blank c05b85032fadfac_12%	78,840	fill in the blank c05b85032fadfac_13%
Gross profitIncome from operationsNet incomeTotal operating expenses	$- Select -	- Select -%	$- Select -	- Select -%
Gross profitIncome from operationsNet incomeTotal operating expenses	- Select -	- Select -%	- Select -	- Select -%
Income tax expense	15,450	fill in the blank c05b85032fadfac_24%	21,900	fill in the blank c05b85032fadfac_25%
Gross profitIncome from operationsNet incomeTotal operating expenses	$- Select -	- Select -%	$- Select -	- Select -%

Question Content Area

b. The vertical analysis indicates that the cost of goods sold as a percent of sales

increaseddecreased

by 6 percentage points, while selling expenses

increaseddecreased

by 2 percentage points, and administrative expenses

increaseddecreased

by 1 percentage points. Thus, net income as a percent of sales

increaseddecreased

by 3 percentage points.