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1. Vertical Analysis of Income Statement

   For 20Y2, Tri-Comic Company initiated a sales promotion campaign that included the expenditure of an additional $20,000 for advertising. At the end of the year, Lumi Neer, the president, is presented with the following condensed comparative income statement:

   Tri-Comic Company Comparative Income Statement For the Years Ended December 31, 20Y2 and 20Y1
   	20Y2		20Y1
   Sales	$724,000		$623,000
   Cost of goods sold	369,240		348,880
   Gross profit	$354,760		$274,120
   Selling expenses	$137,560		$112,140
   Administrative expenses	72,400		74,760
   Total operating expenses	$209,960		$186,900
   Income from operations	$144,800		$87,220
   Other revenue	28,960		18,690
   Income before income tax	$173,760		$105,910
   Income tax expense	72,400		43,610
   Net income	$101,360		$62,300

   Required:

   1. Prepare a comparative income statement for the two-year period, presenting an analysis of each item in relationship to sales for each of the years. Enter percentages as whole numbers. Enter all amounts as positive numbers.

   Tri-Comic Company
   Comparative Income Statement
   For the Years Ended December 31, 20Y2 and 20Y1
   	20Y2 Amount	20Y2 Percent	20Y1 Amount	20Y1 Percent
   Sales	$724,000	%	$623,000	%
   Cost of goods sold	369,240	%	348,880	%
   Gross profit	$354,760	%	$274,120	%
   Selling expenses	$137,560	%	$112,140	%
   Administrative expenses	72,400	%	74,760	%
   Total operating expenses	$209,960	%	$186,900	%
   Income from operations	$144,800	%	$87,220	%
   Other revenue	28,960	%	18,690	%
   Income before income tax	$173,760	%	$105,910	%
   Income tax expense	72,400	%	43,610	%
   Net income	$101,360	%	$62,300	%

   2. The vertical analysis indicates that the costs other than selling expenses (cost of goods sold and administrative expenses) as a percentage of sales. As a result, net income as a percentage of sales . The sales promotion campaign appears to have been . While selling expenses as a percent of sales slightly, the cost was more than made up for by sales.

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