Vertical analysis of income statement For 20Y2, Tri-Comic Company initiated a sales promotion campaign that included the expenditure of an additional $50,000 for advertising. At the end of the year, Lumi Neer, the president, is presented with the following condensed comparative income statement: Tri-Comic Company Sales Cost of goods sold Gross profit Selling expenses 14 Homework Assignn Administrative expenses >Total operating expenses Operating income Other revenue Income before income tax expense Income tax expense Net income Sales Comparative Income Statement For the Years Ended December 31, 20Y2 and 20Y1 1. Prepare a comparative income statement for the two-year period, presenting an analysis of each item in relationship to sales for each of the years. Round percentages to one decimal place. For those boxes in which you must enter subtracted or negative numbers use a minus sign. Tri-Comic Company Line Item Description Cost of goods sold Gross profit Selling expenses Administrative expenses Other revenue Total operating expenses Operating income Net income Income before income tax expense Income tax expense Feedback Comparative Income Statement For the Years Ended December 31, 20Y2 and 20Y1 $ $ $ 20Y2 Amount 1,500,000 510,000 X 990,000 270,000 X 180,000 X >>> 450,000 X 540,000 60,000 20Y2 20Y1 $1,500,000 $1,250,000 (510,000) (475,000) $990,000 $775,000 $(270,000) $(200,000) (180,000) (156,250) $(450,000) $(356,250) $540,000 $418,750 60,000 50,000 > $600,000 (450,000) $150,000 450,000 X 20Y2 Percent 100 34 X % 66% $ % 18 X % $ % % % $468,750 (375,000) $93,750 % % % $ 8800 % 20Y1 Amount 1,250,000 475,000 X 775,000 200,000 X 00000 Check My Work Divide each element by sales to determine the vertical analysis percentage. 20Y1 Percent 100 38 16 X % 38 X % X % % % % % % % % % 2. To the extent the data permit, comment on the significant relationships revealed by the vertical analysis prepared in (1). The vertical analysis indicates that the costs other than selling expenses (cost of goods sold and administrative expenses) as a percentage of sales. As a result, net income as a percentage of sales The sales promotion campaign appears to have been While selling expenses as a percent of sales increased slightly, the increased cost

relabiantho to salet for each st the vars. Round percentages to one decimal place. for those boves in which vou inst ester subtracted ar negave numbers use a minus spon rowak Wor Divide each elemerc br saies to determune the vertical analysis-bercontage 2. To the extent she data permit, comment on the sigruficant if laboriohipe revealed by the vertical analysis prepared in (1). isdministrative expenses] permecotage of sales os a percentage of waks. As a result, net incime as a The ssies promotion Campaign appears to have been