For 20Y2, Tri-Comic Company initiated a sales promotion campaign that included the expenditure of an additional $13,000 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, 20Y2 and 20Y1
	20Y2		20Y1
Sales	$453,000		$390,000
Cost of goods sold	240,090		222,300
Gross profit	$212,910		$167,700
Selling expenses	$86,070		$70,200
Administrative expenses	45,300		46,800
Total operating expenses	$131,370		$117,000
Income from operations	$81,540		$50,700
Other income	18,120		19,500
Income before income tax	$99,660		$70,200
Income tax expense	40,770		27,300
Net income	$58,890		$42,900

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.

	20Y2 Amount	20Y2 Percent	20Y1 Amount	20Y1 Percent
Sales	$453,000	fill in the blank 2fb7aaf6601b07a_1%	$390,000	fill in the blank 2fb7aaf6601b07a_2%
Cost of goods sold	240,090	fill in the blank 2fb7aaf6601b07a_3%	222,300	fill in the blank 2fb7aaf6601b07a_4%
Gross profit	$212,910	fill in the blank 2fb7aaf6601b07a_5%	$167,700	fill in the blank 2fb7aaf6601b07a_6%
Selling expenses	86,070	fill in the blank 2fb7aaf6601b07a_7%	70,200	fill in the blank 2fb7aaf6601b07a_8%
Administrative expenses	45,300	fill in the blank 2fb7aaf6601b07a_9%	46,800	fill in the blank 2fb7aaf6601b07a_10%
Total operating expenses	$131,370	fill in the blank 2fb7aaf6601b07a_11%	$117,000	fill in the blank 2fb7aaf6601b07a_12%
Income from operations	$81,540	fill in the blank 2fb7aaf6601b07a_13%	$50,700	fill in the blank 2fb7aaf6601b07a_14%
Other income	18,120	fill in the blank 2fb7aaf6601b07a_15%	19,500	fill in the blank 2fb7aaf6601b07a_16%
Income before income tax	$99,660	fill in the blank 2fb7aaf6601b07a_17%	$70,200	fill in the blank 2fb7aaf6601b07a_18%
Income tax expense	40,770	fill in the blank 2fb7aaf6601b07a_19%	27,300	fill in the blank 2fb7aaf6601b07a_20%
Net income	$58,890	fill in the blank 2fb7aaf6601b07a_21%	$42,900	fill in the blank 2fb7aaf6601b07a_22%

Question Content Area

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

improveddeteriorated

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

increaseddecreased

. The sales promotion campaign appears to have been

successfulunsuccessful

. While selling expenses as a percent of sales

increaseddecreased

slightly, the

increaseddecreased

cost was more than made up for by

increaseddecreased

sales.