For $20$Y$2,$ Tri$-$Comic Company initiated a sales promotion campaign that included the expenditure of an additional $$15,000$ for advertising. At the end of the year, Lumi Neer, the president, is presented with the following condensed comparative income statement:

Tri$-$Comic Company

Comparative Income Statement

For the Years Ended December $31,20$Y$2$ and $20$Y$1$

$20$Y$220$Y$1$

Sales $$528,000$ $$454,000$

Cost of merchandise sold $269,280249,700$

Gross profit $$258,720$ $$204,300$

Selling expenses $$110,880$ $$90,800$

Administrative expenses $58,08059,020$

Total operating expenses $$168,960$ $$149,820$

Income from operations $$89,760$ $$54,480$

Other revenue $15,84022,700$

Income before income tax expense $$105,600$ $$77,180$

Income tax expense $42,24031,780$

Net income $$63,360$ $$45,400$

Required:

Question Content Area

$1.$ Prepare a comparative income statement for the two$-$year period, presenting an analysis of each item in relationship to sales for each of the years. Enter percentages as whole numbers. Enter all amounts as positive numbers.

Tri$-$Comic Company

Comparative Income Statement

For the Years Ended December $31,20$Y$2$ and $20$Y$1$

$20$Y$2$

Amount $20$Y$2$

Percent $20$Y$1$

Amount $20$Y$1$

Percent

Sales $$528,000$ fill in the blank a$020$a$8$f$45$f$87011\_1$

$\%$ $$454,000$ fill in the blank a$020$a$8$f$45$f$87011\_2$

$\%$

Cost of merchandise sold $269,280$ fill in the blank a$020$a$8$f$45$f$87011\_3$

$\%249,700$ fill in the blank a$020$a$8$f$45$f$87011\_4$

$\%$

Gross profit $$258,720$ fill in the blank a$020$a$8$f$45$f$87011\_5$

$\%$ $$204,300$ fill in the blank a$020$a$8$f$45$f$87011\_6$

$\%$

Selling expenses $$110,880$ fill in the blank a$020$a$8$f$45$f$87011\_7$

$\%$ $$90,800$ fill in the blank a$020$a$8$f$45$f$87011\_8$

$\%$

Administrative expenses $58,080$ fill in the blank a$020$a$8$f$45$f$87011\_9$

$\%59,020$ fill in the blank a$020$a$8$f$45$f$87011\_10$

$\%$

Total operating expenses $$168,960$ fill in the blank a$020$a$8$f$45$f$87011\_11$

$\%$ $$149,820$ fill in the blank a$020$a$8$f$45$f$87011\_12$

$\%$

Income from operations $$89,760$ fill in the blank a$020$a$8$f$45$f$87011\_13$

$\%$ $$54,480$ fill in the blank a$020$a$8$f$45$f$87011\_14$

$\%$

Other revenue $15,840$ fill in the blank a$020$a$8$f$45$f$87011\_15$

$\%22,700$ fill in the blank a$020$a$8$f$45$f$87011\_16$

$\%$

Income before income tax expense $$105,600$ fill in the blank a$020$a$8$f$45$f$87011\_17$

$\%$ $$77,180$ fill in the blank a$020$a$8$f$45$f$87011\_18$

$\%$

Income tax expense $42,240$ fill in the blank a$020$a$8$f$45$f$87011\_19$

$\%31,780$ fill in the blank a$020$a$8$f$45$f$87011\_20$

$\%$

Net income $$63,360$ fill in the blank a$020$a$8$f$45$f$87011\_21$

$\%$ $$45,400$ fill in the blank a$020$a$8$f$45$f$87011\_22$

$\%$

Question Content Area

$2.$ The vertical analysis indicates that the costs other than selling expenses $($cost of merchandise sold and administrative expenses$)$

as a percentage of sales. As a result, net income as a percentage of sales

$.$ The sales promotion campaign appears to have been

$.$ While selling expenses as a percent of sales

slightly, the

cost was more than made up for by

sales.