Question

# Income statement data for Boone Company for two recent years ended December 31, are as follows:...

Income statement data for Boone Company for two recent years ended December 31, are as follows:

 Current Year Previous Year Sales \$396,000 \$330,000 Cost of goods sold 330,400 280,000 Gross profit \$65,600 \$50,000 Selling expenses \$17,600 \$16,000 Administrative expenses 16,520 14,000 Total operating expenses \$34,120 \$30,000 Income before income tax \$31,480 \$20,000 Income tax expenses 12,600 8,000 Net income \$18,880 \$12,000

a. Prepare a comparative income statement with horizontal analysis, indicating the increase (decrease) for the current year when compared with the previous year. If required, round to one decimal place.

 Boone Company Comparative Income Statement For the Years Ended December 31 Current year Amount Previous year Amount Increase (Decrease) Amount Increase (Decrease) Percent Sales \$396,000 \$330,000 \$ % Cost of goods sold 330,400 280,000 % Gross profit \$65,600 \$50,000 \$ % Selling expenses 17,600 16,000 % Administrative expenses 16,520 14,000 % Total operating expenses \$34,120 \$30,000 \$ % Income before income tax \$31,480 \$20,000 \$ % Income tax expense 12,600 8,000 % Net income \$18,880 \$12,000 \$ %

b. The net income for Boone Company increased by 57.3% between years. This increase was the combined result of an   in sales of 20% and   percentage   in cost of goods sold. The cost of goods sold increased at a   rate than the increase in sales, thus causing the percentage increase in gross profit to be   than the percentage increase in sales.

Part B is already solved in the question, hence am pasting the same from the question above.

The net income for Boone Company increased by 57.3% between years. This increase was the combined result of an   in sales of 20% and   percentage   in cost of goods sold. The cost of goods sold increased at a   rate than the increase in sales, thus causing the percentage increase in gross profit to be than the percentage increase in sales.

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