Tri-Comic Company Comparative Income Statement For the Years Ended December 31, 20Y2 and 20Y1 20Y2 20Y1 Sales $1,500,000 $1,250,000 Cost of goods sold 510,000 475,000 Gross profit $990,000 $775,000 Selling expenses $270,000 $200,000 Administrative expenses 180,000 156,250 Total operating expenses $450,000 $356,250 Income from operations $540,000 $418,750 Other revenue 60,000 50,000 Income before income tax $600,000 $468,750 Income tax expense 450,000 375,000 Net income $150,000 $93,750 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. Round percentages to one decimal place. Tri-Comic Company Comparative Income Statement For the Years Ended December 31, 20V2 and 20Y1 20Y2 Amount 20Y2 Percent 20Y1 Amount 20Y1 Percent Sales $1,500,000 $1,250,000 Cost of goods sold 510,000 % 475,000 Gross profit $990,000 9% $775,000 Selling expenses $270,000 $200,000 Administrative expenses 180,000 156,250 Total operating expenses $450,000 % $356,250 Income from operations $540,000 9% $418,750 % Other revenue 60,000 50,000 Income before income tax $600,000 $468,750 450,000 375,000 Income tax expense % $150,000 $93,750 Net income
2. The vertical analysis indicates that the costs other than selling expenses (cost of goods sold and administrative expenses) The sales promotion as a percentage of sales. As a result, net income as a percentage of sales While selling expenses as a percent of sales slightly, the campaign appears to have been sales. cost was more than made up for by sales.