Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Horizontal analysis of income statement For 2 0 Y 2 , Macklin Inc. reported a significant decrease in net income. At the end of the

Horizontal analysis of income statement
For 20Y2, Macklin Inc. reported a significant decrease in net income. At the end of the year, John Mayer, the president, is presented with the following condensed comparative income statement:
Macklin Inc.
Comparative Income Statement
For the Years Ended December 31,20Y2 and 20Y1
Line Item Description 20Y220Y1
Sales $320,730 $285,000
Cost of goods sold (226,800)(180,000)
Gross profit $93,930 $105,000
Selling expenses $(31,800) $(24,000)
Administrative expenses (18,510)(15,000)
Total operating expenses $(50,310) $(39,000)
Operating income $43,620 $66,000
Other revenue 1,4621,200
Income before income tax expense $45,082 $67,200
Income tax expense (12,600)(20,200)
Net income $32,482 $47,000
Required:
Question Content Area
1. Prepare a comparative income statement with horizontal analysis for the two-year period, using 20Y1 as the base year. Use the minus sign to indicate a decrease in the "Increase/(Decrease)" columns. If required, round percentages to one decimal place.
Macklin Inc.
Comparative Income Statement
For the Years Ended December 31,20Y2 and 20Y1
Line Item Description
20Y2
20Y1 Increase/
(Decrease)
Amount Increase/
(Decrease)
Percent
Sales $320,730 $285,000 $Sales
Sales
%
Cost of goods sold (226,800)(180,000) Cost of goods sold
Cost of goods sold
%
Gross profit $93,930 $105,000 $Gross profit
Gross profit
%
Selling expenses $(31,800) $(24,000) $Selling expenses
Selling expenses
%
Administrative expenses (18,510)(15,000) Administrative expenses
Administrative expenses
%
Total operating expenses $(50,310) $(39,000) $Total operating expenses
Total operating expenses
%
Operating income $43,620 $66,000 $Operating income
Operating income
%
Other revenue 1,4621,200 Other revenue
Other revenue
%
Income before income tax expense $45,082 $67,200 $Income before income tax expense
Income before income tax expense
%
Income tax expense (12,600)(20,200) Income tax expense
Income tax expense
%
Net income $32,482 $47,000 $Net income
Net income
%
Question Content Area
2. Net income has fill in the blank 1 of 4
from 20Y1 to 20Y2. Sales have fill in the blank 2 of 4
; however, the cost of goods sold has fill in the blank 3 of 4
at a faster rate than sales, causing the gross profit to fill in the blank 4 of 4
.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

A Textbook Of Cost And Management Accounting

Authors: Arora

10th Edition

9789325956209

More Books

Students also viewed these Accounting questions