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 $474,000 Cost of goods sold 255,960 $431,000 211,190 86,200 85,320 Selling expenses Administrative expenses 94,800 81,890 21,550 Income tax expense 14,220 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 Current year Percent Previous year Previous year Percent Amount Amount % $474,000 Sales % $431,000 % 255,960 211,190 % Cost of goods sold % % % 86,200 % 85,320 Selling expenses Administrative % % 94,800 81,890 AVONCA Innovation Quarter Inc. Comparative Income Statement For the Years Ended December 31 Current year Current year Percent Previous year Amount Amount $474,000 100 % $431,000 255,960 % 211,190 Previous year Percent Sales 100 % Cost of goods sold % % % 85,320 % 86,200 % Selling expenses Administrative expenses 94,800 % 81,890 % % % % % % 14,220 Income tax expense % 21,550 % % 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 2 percentage points