Question

Use the following data to prepare a common-size comparative income statement for Old Mill Corporation on December 31, 2016. Round percentages to one-tenth percent.

	2016	2015
Net sales	$1,151,000	$1,350,000
Expenses:
Cost of goods sold	$980,000	$860,000
Selling and general expenses	290,000	230,000
Interest expense	59,000	59,000
Income tax expense	71,000	53,000
Total expenses	$1,400,000	$1,202,000
Net income	$110,000	$148,000

Answer 1

Common size income statement
	2016		2015
	Amount	Percentage	Amount	Percentage
Net sales	$       11,51,000.00	100.00%	$    13,50,000.00	100.00%
Expenses:
Cost of goods sold	$         9,80,000.00	85.14%	$       8,60,000.00	63.70%
Selling and general expenses	$         2,90,000.00	25.20%	$       2,30,000.00	17.04%
Interest expense	$             59,000.00	5.13%	$          59,000.00	4.37%
Income tax expense	$             71,000.00	6.17%	$          53,000.00	3.93%
Total expenses	$       14,00,000.00	121.63%	$    12,02,000.00	89.04%
Net income	$       (2,49,000.00)	-21.63%	$       1,48,000.00	10.96%

The net income amount in 2015 seems wrong, I have solved the question in the amount which it should be . Although i have given below alternate solution with the amounts as it is in the above question.

Please see below given alternate solution

Common size income statement
	2016		2015
	Amount	Percentage	Amount	Percentage
Net sales	$       11,51,000.00	100.00%	$    13,50,000.00	100.00%
Expenses:
Cost of goods sold	$         9,80,000.00	85.14%	$       8,60,000.00	63.70%
Selling and general expenses	$         2,90,000.00	25.20%	$       2,30,000.00	17.04%
Interest expense	$             59,000.00	5.13%	$          59,000.00	4.37%
Income tax expense	$             71,000.00	6.17%	$          53,000.00	3.93%
Total expenses	$       14,00,000.00	121.63%	$    12,02,000.00	89.04%
Net income	$         1,10,000.00	9.56%	$       1,48,000.00	10.96%