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Vertical Analysis of Income Statement Revenue and expense data for Innovation Quarter Inc. for two recent years...

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Accounting

Vertical Analysis of Income Statement

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

       CurrentYear       PreviousYear
Sales$567,000$493,000
Cost of goods sold385,560310,590
Selling expenses73,71073,950
Administrative expenses79,38064,090
Income tax expense11,34019,720

a. Prepare an income statement in comparativeform, stating each item for both years as a percent of sales. Ifrequired, round percentages to one decimal place. Enter all amountsas positive numbers.

Innovation Quarter Inc.
Comparative Income Statement
For the Years Ended December 31
Current year AmountCurrent year PercentPrevious year AmountPrevious year Percent
Sales$567,000%$493,000%
Cost of goods sold385,560%310,590%
$%$%
Selling expenses73,710%73,950%
Administrative expenses79,380%64,090%
$%$%
%%
Income tax expense11,340%19,720%
$%$%

b. The vertical analysis indicates that thecost of goods sold as a percent of sales ___ by 5 percentagepoints, while selling expenses ___ by 2 percentage points, andadministrative expenses ___ by 1 percentage points. Thus, netincome as a percent of sales ___ by 2 percentage points.

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Innovation Quarter Inc Comparative Income Statement For the Years Ended December 31 Current year Amount Current year Percent Previous year Amount Previous year Percent    See Answer
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