Question

Sundahl Company’s income statements for the past 2 years are as follows:

Sundahl Company
Income Statements
For the Years 1 and 2
	Year 1	Year 2
Sales	$2,016,000.00	$1,816,000.00
Less: Cost of goods sold	($1,409,000.00)	($1,209,000.00)
Gross margin	$607,000.00	$607,000.00
Less operating expenses:
Selling expenses	($308,000.00)	($308,000.00)
Administrative expenses	-99,200.00	-110,000.00
Operating income	$199,800.00	$189,000.00
Less:
Interest expense	($50,800.00)	($40,000.00)
Net income before taxes	$149,000.00	$149,000.00

Prepare a common-size income statement for Year 2 by expressing each line item for Year 2 as a percentage of that same line item from Year 1.

Refer to the list below for the exact wording of an account title within your income statement.

Labels
Add
Add operating expenses
Less
Less operating expenses
Amount Descriptions
Administrative expenses
Contribution margin
Cost of goods sold
Gross margin
Income after taxes
Income before taxes
Interest expense
Operating income
Sales
Selling expenses
Total

Prepare a common-size income statement for Year 2 by expressing each line item for Year 2 as a percentage of that same line item from Year 1. (Note: Enter all expenses as positive numbers. Enter net loss as a negative number, if applicable. Round answers to the nearest tenth of a percent. Refer to the Labels and Amount Descriptions list provided for the exact wording of the answer choices for text entries.)

Answer 1

Answer-

SUNDAHL COMPANY
COMMON-SIZE COMPARATIVE INCOME STATEMENTS
FOR THE YEAR 1 & 2
YEARS	YEAR 1	%	YEAR 2	%
	$		$
Sales	2016000.00	100.0	1816000.00	100.0
Less-Cost of goods sold	1409000.00	69.9	1209000.00	66.6
Gross margin	607000.00	30.1	607000.00	33.4
Less- Operating expenses
Selling expenses	308000.00	15.3	308000.00	17.0
Adminstrative expesnes	99200.00	4.9	110000.00	6.1
Operating income	199800.00	9.9	189000.00	10.4
Less- Interest expense	50800.00	2.5	40000.00	2.2
Net income before taxes	149000.00	7.4	149000.00	8.2