Prepare a common size income statement for Rice company, a sole proprietorship, for two years shown as follows by converting the dollar amount 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.

Sales COGS Gross Profit Operating Expenses Year 1 650000 429000 221000 162500 58500 Year 2 520000 348400 171600 150800 Net Income 20800