Question

For 20Y2, Macklin Inc. reported a significant decrease in net income. At the end of the year, John Mayer, the president, is presented with the following condensed comparative income statement:

Macklin Inc. Comparative Income Statement For the Years Ended December 31, 20Y2 and 20Y1
	20Y2		20Y1
Sales	$841,340		$750,000
Cost of goods sold	(592,200)		(470,000)
Gross profit	$249,140		$280,000
Selling expenses	$(83,480)		$(63,000)
Administrative expenses	(49,360)		(40,000)
Total operating expenses	$(132,840)		$(103,000)
Operating income	$116,300		$177,000
Other revenue	4,109		3,200
Income before income tax expense	$120,409		$180,200
Income tax expense	(33,700)		(54,100)
Net income	$86,709		$126,100

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 "Increase/(Decrease)" columns. If required, round percentages to one decimal place.

Macklin Inc.
Comparative Income Statement
For the Years Ended December 31, 20Y2 and 20Y1
	20Y2	20Y1	Increase/ (Decrease) Amount	Increase/ (Decrease) Percent
Sales	$841,340	$750,000	$	%
Cost of goods sold	(592,200)	(470,000)		%
Gross profit	$249,140	$280,000	$	%
Selling expenses	$(83,480)	$(63,000)	$	%
Administrative expenses	(49,360)	(40,000)		%
Total operating expenses	$(132,840)	$(103,000)	$	%
Operating income	$116,300	$177,000	$	%
Other revenue	4,109	3,200		%
Income before income tax expense	$120,409	$180,200	$	%
Income tax expense	(33,700)	(54,100)		%
Net income	$86,709	$126,100	$	%

Answer 1

Correct Answer:

Macklin Inc.
Comparative income statement
For the years Ended December 31, 20Y2 & 20Y1
	A	B	C=A-B	D=C/A *100
	20Y2	20Y1	Increase/ (Decrease )Amount	Increase/(Decrease) Percent
Sales	$              841,340	$            750,000	$              91,340	12.2%
Cost of goods sold	$            (592,200)	$         (470,000)	$         22,200	26.0%
Gross profit	$              249,140	$            280,000	$            30,860	11.0%
selling expenses	$              (83,480)	$            (63,000)	$            20,480	32.5%
Administrative expenses	$              (49,360)	$            (40,000)	$              9,360	23.4%
Total operating expenses	$            (132,840)	$         (103,000)	$            29,840	29.0%
Operating income	$              116,300	$            177,000	$            (60,700)	-34.3%
other revenue	$                   4,109	$                3,200	$                    909	28.4%
income before income tax expense	$              120,409	$            180,200	$            (59,791)	-33.2%
income tax expense	$              (33,700)	$            (54,100)	$             ( 20,400)	-37.7%
net income	$                 86,709	$            126,100	$            (39,391)	-31.2%

End of answer.

Please give a thumbs up, it will be highly appreciated.

Thanks.