The following percentages apply to Vernon Company for Year 3 and Year 4. Year 4 Sales 100.0% Year 3 100.0% Cost of goods sold 61.0 64.0 Gross margin 39.0 36.0 Selling and administrative expense 26.4 20.7 Interest expense 2.6 2.1 Total expenses 29.0 22.8 Income before taxes 10.0 13.2 Income tax expense 5.4 7.0 4.6% 6.2% Net income Required Assuming that sales were $510,000 in Year 3 and $590,000 in, Year 4, prepare income statements for the two years. Sales Cost of goods sold. Gross margin VERNON COMPANY Income Statements Year 4 Year 3 Selling and administrative expenses Interest expense Total expenses Income before taxes Income tax expense Net income