Question

In: Accounting

Horizontal Analysis of Income Statement For 20Y2, McDade Company reported a decline in net income. At...

Horizontal Analysis of Income Statement

For 20Y2, McDade Company reported a decline in net income. At the end of the year, T. Burrows, the president, is presented with the following condensed comparative income statement:

McDade Company
Comparative Income Statement
For the Years Ended December 31, 20Y2 and 20Y1
20Y2 20Y1
Sales $526,224 $456,000
Cost of goods sold 382,800 290,000
Gross profit $143,424 $166,000
Selling expenses $53,200 $38,000
Administrative expenses 30,910 24,000
Total operating expenses $84,110 $62,000
Income from operations $59,314 $104,000
Other income 2,421 1,900
Income before income tax $61,735 $105,900
Income tax expense 17,300 31,800
Net income $44,435 $74,100

Required:

1. Prepare a comparative income statement with horizontal analysis for the two-year period, using 20Y1 as the base year. Use the minus sign to indicate a decrease in the "Difference" columns. If required, round to one decimal place.

McDade Company
Comparative Income Statement
For the Years Ended December 31, 20Y2 and 20Y1
20Y2 20Y1 Difference - Amount Difference - Percent
Sales $526,224 $456,000 $ %
Cost of goods sold 382,800 290,000 %
Gross profit $143,424 $166,000 $ %
Selling expenses $53,200 $38,000 $ %
Administrative expenses 30,910 24,000 %
Total operating expenses $84,110 $62,000 $ %
Income from operations $59,314 $104,000 $ %
Other income 2,421 1,900 %
Income before income tax $61,735 $105,900 $ %
Income tax expense 17,300 31,800 %
Net income $44,435 $74,100 $ %

2. Net income has   from 20Y1 to 20Y2. Sales have  ; however, the cost of goods sold has  , causing the gross profit to  .

Solutions

Expert Solution

McDade Company
Comparative Income Statement
For the Years Ended December 31, 20Y2 and 20Y1
20Y2 20Y1 Difference - Amount Difference - Percent
Sales         5,26,224         4,56,000                         70,224 15.4%
Cost of goods sold         3,82,800         2,90,000                         92,800 32.0%
Gross profit         1,43,424         1,66,000                        -22,576 -13.6%
Selling expenses            53,200            38,000                         15,200 40.0%
Administrative expenses            30,910            24,000                           6,910 28.8%
Total operating expenses            84,110            62,000                         22,110 35.7%
Income from operations            59,314         1,04,000                        -44,686 -43.0%
Other income             2,421             1,900                              521 27.4%
Income before income tax            61,735         1,05,900                        -44,165 -41.7%
Income tax expense            17,300            31,800                        -14,500 -45.6%
Net income            44,435            74,100                        -29,665 -40.0%

Related Solutions

Horizontal Analysis of Income Statement For 20Y2, McDade Company reported a decline in net income. At...
Horizontal Analysis of Income Statement For 20Y2, McDade Company reported a decline in net income. At the end of the year, T. Burrows, the president, is presented with the following condensed comparative income statement: McDade Company Comparative Income Statement For the Years Ended December 31, 20Y2 and 20Y1 20Y2 20Y1 Sales $693,095 $579,000 Cost of goods sold 518,000 370,000 Gross profit $175,095 $209,000 Selling expenses $73,500 $49,000 Administrative expenses 42,160 31,000 Total operating expenses $115,660 $80,000 Income from operations $59,435...
Horizontal Analysis of Income Statement For 20Y2, McDade Company reported a decline in net income. At...
Horizontal Analysis of Income Statement For 20Y2, McDade Company reported a decline in net income. At the end of the year, T. Burrows, the president, is presented with the following condensed comparative income statement: McDade Company Comparative Income Statement For the Years Ended December 31, 20Y2 and 20Y1 20Y2 20Y1 Sales $815,178 $741,000 Cost of goods sold 573,400 470,000 Gross profit $241,778 $271,000 Selling expenses $79,050 $62,000 Administrative expenses 46,720 39,000 Total operating expenses $125,770 $101,000 Income from operations $116,008...
Horizontal Analysis of Income Statement For 20Y2, McDade Company reported a decline in net income. At...
Horizontal Analysis of Income Statement For 20Y2, McDade Company reported a decline in net income. At the end of the year, T. Burrows, the president, is presented with the following condensed comparative income statement: McDade Company Comparative Income Statement For the Years Ended December 31, 20Y2 and 20Y1 20Y2 20Y1 Sales $505,848 $446,000 Cost of goods sold 358,400 280,000 Gross profit $147,448 $166,000 Selling expenses $51,300 $38,000 Administrative expenses 30,050 24,000 Total operating expenses $81,350 $62,000 Income from operations $66,098...
Horizontal Analysis of Income Statement For 20Y2, McDade Company reported a decline in net income. At...
Horizontal Analysis of Income Statement For 20Y2, McDade Company reported a decline in net income. At the end of the year, T. Burrows, the president, is presented with the following condensed comparative income statement: McDade Company Comparative Income Statement For the Years Ended December 31, 20Y2 and 20Y1 20Y2 20Y1 Sales $501,094 $418,000 Cost of goods sold 364,000 260,000 Gross profit $137,094 $158,000 Selling expenses $52,500 $35,000 Administrative expenses 29,920 22,000 Total operating expenses $82,420 $57,000 Income from operations $54,674...
Solve the follwing problem. Horizontal analysis of income statement For 20Y2, McDade Company reported a decline...
Solve the follwing problem. Horizontal analysis of income statement For 20Y2, McDade Company reported a decline in net income. At the end of the year, T. Burrows, the president, is presented with the following condensed comparative income statement: McDade Company Comparative Income Statement For the Years Ended December 31, 20Y2 and 20Y1 1 20Y2 20Y1 2 Sales $6,787,200.00 $6,060,000.00 3 Cost of goods sold 2,444,200.00 2,020,000.00 4 Gross profit $4,343,000.00 $4,040,000.00 5 Selling expenses $1,125,000.00 $900,000.00 6 Administrative expenses 711,200.00...
For 20Y2, McDade Company reported a decline in net income. At the end of the year,...
For 20Y2, McDade Company reported a decline in net income. At the end of the year, T. Burrows, the president, is presented with the following condensed comparative income statement: McDade Company Comparative Income Statement For the Years Ended December 31, 20Y2 and 20Y1 1 20Y2 20Y1 2 Sales $7,369,600.00 $6,580,000.00 3 Cost of goods sold 2,719,733.00 2,193,333.00 4 Gross profit $4,649,867.00 $4,386,667.00 5 Selling expenses $1,049,600.00 $820,000.00 6 Administrative expenses 658,050.00 535,000.00 7 Total operating expenses $1,707,650.00 $1,355,000.00 8 Income...
For 20Y2, McDade Company reported a decline in net income. At the end of the year,...
For 20Y2, McDade Company reported a decline in net income. At the end of the year, T. Burrows, the president, is presented with the following condensed comparative income statement: McDade Company Comparative Income Statement For the Years Ended December 31, 20Y2 and 20Y1 20Y2 20Y1 Sales $361,360 $304,000 Cost of goods sold 262,200 190,000 Gross profit $99,160 $114,000 Selling expenses $38,350 $26,000 Administrative expenses 21,470 16,000 Total operating expenses $59,820 $42,000 Income from operations $39,340 $72,000 Other revenue 1,580 1,300...
For 20Y2, McDade Company reported a decline in net income. At the end of the year,...
For 20Y2, McDade Company reported a decline in net income. At the end of the year, T. Burrows, the president, is presented with the following condensed comparative income statement: Question not attempted. McDade Company Comparative Income Statement For the Years Ended December 31, 20Y2 and 20Y1 1 20Y2 20Y1 2 Sales $16,800,000.00 $15,000,000.00 3 Cost of goods sold 11,500,000.00 10,000,000.00 4 Gross profit $5,300,000.00 $5,000,000.00 5 Selling expenses $1,770,000.00 $1,500,000.00 6 Administrative expenses 1,220,000.00 1,000,000.00 7 Total operating expenses $2,990,000.00...
For 20Y2, McDade Company reported a decline in net income. At the end of the year,...
For 20Y2, McDade Company reported a decline in net income. At the end of the year, T. Burrows, the president, is presented with the following condensed comparative income statement: McDade Company Comparative Income Statement For the Years Ended December 31, 20Y2 and 20Y1 1 20Y2 20Y1 2 Sales $7,750,400.00 $6,920,000.00 3 Cost of goods sold 2,791,067.00 2,306,667.00 4 Gross profit $4,959,333.00 $4,613,333.00 5 Selling expenses $1,187,500.00 $950,000.00 6 Administrative expenses 701,100.00 570,000.00 7 Total operating expenses $1,888,600.00 $1,520,000.00 8 Income...
For 20Y2, McDade Company reported a decline in net income. At the end of the year, T. Burrows, the president, is presented with the following condensed comparative income statement:
orizontal Analysis of Income StatementFor 20Y2, McDade Company reported a decline in net income. At the end of the year, T. Burrows, the president, is presented with the following condensed comparative income statement:McDade CompanyComparative Income StatementFor the Years Ended December 31, 20Y2 and 20Y120Y220Y1Sales$596,682$541,000Cost of merchandise sold414,800340,000Gross profit$181,882$201,000Selling expenses$58,650$46,000Administrative expenses34,74029,000Total operating expenses$93,390$75,000Income from operations$88,492$126,000Other revenue2,8572,300Income before income tax expense$91,349$128,300Income tax expense25,60038,500Net income$65,749$89,800Required:1. Prepare a comparative income statement with horizontal analysis for the two-year period, using 20Y1 as the base year....
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT