Chapter 14 Homework

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Horizontal Analysis of Income Statement 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 $451,962 $399,000 (250,000) Cost of goods sold (320,000) Gross profit $131,962 $149,000 Selling expenses $(34,000) $(45,900) (26,290) Administrative expenses (21,000) Total operating expenses $(72,190) $(55,000) Operating income $59,772 $94,000 Other revenue 2,173 1,700 Income before income tax expense $61,945 $95,700 Income tax expense (17,300) (28,700) Net income $44,645 $67,000 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 Increase (Decrease) 20Y2 20Y1 Amount Sales $451,962 $399,000 $ 210,000 X 1 Cost of goods sold (320,000) (250,000) Gross profit $131,962 $149,000 $ Selling expenses $(45,900) $(34,000) $ Administrative expenses (26,290) (21,000) Increase/ (Decrease) Percent 30.0 % X Total operating expenses $(72,190) $(55,000) Operating income $59,772 2,173 $94,000 $ 1,700 Other revenue QQQQUU Income before income tax expense $61,945 (17,300) $95,700 $ (28,700) Income tax expense Net income $44,645 $67,000