1. Vertical Analysis of Income Statement

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

   	Current Year		Previous Year
   Sales	$394,000		$339,000
   Cost of goods sold	212,760		155,940
   Selling expenses	70,920		74,580
   Administrative expenses	78,800		64,410
   Income tax expense	11,820		16,950

   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	$394,000	%	$339,000	%
   Cost of goods sold	212,760	%	155,940	%
   	$	%	$	%
   Selling expenses	70,920	%	74,580	%
   Administrative expenses	78,800	%	64,410	%
   	$	%	$	%
   		%		%
   Income tax expense	11,820	%	16,950	%
   	$	%	$	%

   b. The vertical analysis indicates that the cost of goods sold as a percent of sales by 8 percentage points, while selling expenses by 4 percentage points, and administrative expenses by 1 percentage points. Thus, net income as a percent of sales by 3 percentage points.