EXERCISE 14.3 Common Size Income Statements Prepare common size income statements for Price Company, a sole proprietorship, for the two years shown as follows by converting the dollar amounts into percentages. For each year, sales will appear as 100 percent and other items will be expressed as a percentage of sales. (Income taxes are not involved as the business is not incorporated.) Comment on whether the changes from year 1 to year 2 are favorable or unfavorable. page 665 Year 2 Year 1 Sales $400,000 $ 500,000 268,000 Cost of goods sold Gross profit 330.000 $132,000 $ 170,000 116.000 Operating expenses 125.000 Net income $ 16,000 45,000