Scherer Company provided the following income statements for its first 3 years of operation:

Scherer Company

Income Statements

Years of Operation

1		Year 1	Year 2	Year 3
2	Net sales	$960,000.00	$1,056,000.00	$1,248,000.00
3	Less: Cost of goods sold	295,000.00	324,000.00	363,000.00
4	Gross margin	$665,000.00	$732,000.00	$885,000.00
5	Less:
6	Operating expenses	425,000.00	484,000.00	595,500.00
7	Income taxes	109,600.00	121,200.00	136,600.00
8	Net income	$130,400.00	$126,800.00	$152,900.00

	Required:
	Prepare common-size income statements by using net sales as the base.

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Labels and Amount Descriptions

Refer to the list below for the exact wording of an account title within your income statement.

Labels
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Less
Amount Descriptions
Add contribution margin
Cost of goods sold
Gross margin
Income taxes
Less contribution margin
Net income
Net loss
Net sales
Operating Expenses