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Revenue and expense data for Innovation Quarter Inc. for two recent years are as follows: Current Year Previous Year Sales $381,000 $328,000 Cost of goods

Revenue and expense data for Innovation Quarter Inc. for two recent years are as follows:

Current Year Previous Year
Sales $381,000 $328,000
Cost of goods sold 220,980 173,840
Selling expenses 64,770 62,320
Administrative expenses 68,580 55,760
Income tax expense 11,430 13,120

a. Prepare an income statement in comparative form, stating each item for both years as a percent of sales. If required, round percentages to one decimal place. Enter all amounts as positive numbers.

Innovation Quarter Inc.
Comparative Income Statement
For the Years Ended December 31
Current year Amount Current year Percent Previous year Amount Previous year Percent
Sales $381,000 % $328,000 %
Cost of goods sold 220,980 % 173,840 %
$ % $ %
Selling expenses 64,770 % 62,320 %
Administrative expenses 68,580 % 55,760 %
$ % $ %
% %
Income tax expense 11,430 % 13,120 %
$ % $ %

b. The vertical analysis indicates that the cost of goods sold as a percent of sales by 5 percentage points, while selling expenses by 2 percentage points, and administrative expenses by 1 percentage points. Thus, net income as a percent of sales by 3 percentage points.

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