A comparative income statement follows for Martine Ltd. of Montreal: MARTINE LTD.Comparative Income StatementFor the Years Ended October 31, Year 1 and Year 2 Year 2Year 1Sales$8,050,000 $6,050,000 Less: Cost of goods sold 5,095,650 3,605,800 Gross margin 2,954,350 2,444,200 Less: Operating expenses: Selling expenses 1,529,500 1,131,350 Administrative expenses 756,700 726,000 Total expenses 2,286,200 1,857,350 Net operating income 668,150 586,850 Less: Interest expense 136,850 114,950 Net income before taxes$531,300 $471,900 Members of the company's board of directors are surprised to see that net income increased by only $59,400 when sales increased by $2,000,000. Required:1. Express each year’s income statement in common-size percentages. (Round your answers to 1 decimal place.)

A common size income statement is an income statement that expresses each account as a percentage of…

Answered: A comparative income statement follows…

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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A comparative income statement follows for Martine Ltd. of Montreal:

MARTINE LTD.
Comparative Income Statement
For the Years Ended October 31, Year 1 and Year 2
	Year 2	Year 1
Sales	$	8,050,000	$	6,050,000
Less: Cost of goods sold		5,095,650		3,605,800
Gross margin		2,954,350		2,444,200
Less: Operating expenses:
Selling expenses		1,529,500		1,131,350
Administrative expenses		756,700		726,000
Total expenses		2,286,200		1,857,350
Net operating income		668,150		586,850
Less: Interest expense		136,850		114,950
Net income before taxes	$	531,300	$	471,900