Exercise 14-1 (Algo) Common-Size Income Statement [LO14-1]A comparative income statement is given below for McKenzie Sales, Limited, of Toronto:McKenzie Sales, LimitedComparative Income StatementSalesCost of goods soldGross marginSelling and administrative expenses:Selling expensesAdministrative expensesTotal expensesNet operating incomeInterest expenseNet income before taxesSalesCost of goods soldGross marginSelling and administrative expenses:Selling expensesAdministrative expensesTotal selling and administrative expensesNet operating incomeInterest expenseNet income before taxesMembers of the company's board of directors are surprised to see that net income increased by only $188,500 when sales increasedby $1,752,000.This YearThis Year$ 7,300,0004,660,0002,640,000Required:1. Express each year's income statement in common-size percentages. (Round your percentage answers to 1 decimal place (i.e.,0.1234 should be entered as 12.3).)%%0.0 %1,379,000711,5002,090,500549,500102,000$ 447,500%%0.0 %0.0 %%0.0 %Last YearLast Year$5,548,0003,509,0002,039,000%%0.0 %1,081,000614,0001,695,000344,00085,000$ 259,000%%0.0 %0.0 %%0.0 %

Lets understand the basics. There are two type of analysis are generally made which are, (1)…

Exercise 14-1 (Algo) Common-Size Income Statement [LO14-1] A comparative income statement is given below for McKenzie Sales, Limited, of Toronto: McKenzie Sales, Limited Comparative Income Statement Sales Cost of goods sold Gross margin Selling and administrative expenses: Selling expenses Administrative expenses Total expenses Net operating income Interest expense Net income before taxes This Year $ 7,300,000 4,660,000 2,640,000 1,379,000 711,500 2,090,500 549,500 102,000 $ 447,500 Last Year $ 5,548,000 3,509,000 2,039,000 1,081,000 614,000 1,695,000 344,000 85,000 $ 259,000

Exercise 14-1 (Algo) Common-Size Income Statement [LO14-1] A comparative income statement is given below for McKenzie Sales, Limited, of Toronto: McKenzie Sales, Limited Comparative Income Statement Sales Cost of goods sold Gross margin Selling and administrative expenses: Selling expenses Administrative expenses Total expenses Net operating income Interest expense Net income before taxes This Year $ 7,300,000 4,660,000 2,640,000 1,379,000 711,500 2,090,500 549,500 102,000 $ 447,500 Last Year $ 5,548,000 3,509,000 2,039,000 1,081,000 614,000 1,695,000 344,000 85,000 $ 259,000

Financial Accounting: The Impact on Decision Makers

10th Edition

ISBN:9781305654174

Author:Gary A. Porter, Curtis L. Norton

Publisher:Gary A. Porter, Curtis L. Norton

Chapter2: Financial Statements And The Annual Report

Section: Chapter Questions

Problem 2.13MCE

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