PR 17-1A Horizontal analysis of income statement OBJ. 2 ase For 20Y2, McDade Com

Question

PR 17-1A Horizontal analysis of income statement OBJ. 2 ase 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 Cost of goods sold. Gross profit..5.300,000 $5000,000 Selling expenses.... $16,800,000 $15,000,000 1.220,0001 1,000,000 256,950 225,000 Instructions 1. Prepare a comparative income statement with horizontal analysis for the two-year period, using 20Y1 as the base year. Round percentages to one decimal place. 2. To the extent the data permit, comment on the significant relationships revealed by the horizontal analysis prepared in (1).

Explanation / Answer

PART1

Comparitive Income Statements with Horizontal Analysis for Two Year Period using Base year as 2011

PART1

Comparitive Income Statements with Horizontal Analysis for Two Year Period using Base year as 2011

Year 2012 Year 2011 Difference in $ Difference in % Sales $1,68,00,000.00 $1,50,00,000.00 $18,00,000.00 12.0% COGS $1,15,00,000.00 $1,00,00,000.00 $15,00,000.00 15.0% Gross Profir $53,00,000.00 $50,00,000.00 $3,00,000.00 6.0% Selling Expenses $17,70,000.00 $15,00,000.00 $2,70,000.00 18.0% Administrative Expenses $12,20,000.00 $10,00,000.00 $2,20,000.00 22.0% Total Operating Expenses $29,90,000.00 $25,00,000.00 $4,90,000.00 19.6% Income from Operations $23,10,000.00 $25,00,000.00 -$1,90,000.00 -7.6% Other Revenue $2,56,950.00 $2,25,000.00 $31,950.00 14.2% Income before Income Tax $25,66,950.00 $27,25,000.00 -$1,58,050.00 -5.8% Income tax Expenses $14,13,000.00 $15,00,000.00 -$87,000.00 -5.8% Net Income $11,53,950.00 $12,25,000.00 -$71,050.00 -5.8%

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