Homework SourseRevenue and expense data for Emerging Technologies are as fo
Revenue and expense data for Emerging Technologies are as follows:
Year 2
Year 1
Sales
$520,000
$440,000
Cost of goods sold
325,000
242,000
Selling expense
70,000
79,200
Administrative expenses
75,000
70,400
Income tax expense
16,500
16,400
(a) Prepare an income statement in comparative form, stating each item for both years as an amount and as a percent of sales. Round to the nearest whole percent.
(b) Comment on the significant changes disclosed by the comparative income statement.
Show all work
| Year 2 | Year 1 | |
| Sales | $520,000 | $440,000 |
| Cost of goods sold | 325,000 | 242,000 |
| Selling expense | 70,000 | 79,200 |
| Administrative expenses | 75,000 | 70,400 |
| Income tax expense | 16,500 | 16,400 |
Solution
Comment
There is significant change in the cost of goods sold that has increased by around 7% in one year. There should be analysis of reasons for increase in cost of goods sold.and corrective measure should be taken.
Selling expense has decrease from 18 to 13% .
Tax expense and Admin expense doesn\'t have any significant changes.
| Particular | year 2 | year 1 |
| Sales (sales/saless) *100 (x) | 100 | 100 |
| Cost of goods sold(cost of goods sold /sales) *100=(y) | 62.5 | 55 |
| Gross profit(a) =x-y | 37.50 | 45 |
| Selling expense(b)(sales expense/sales) *100 | 13.46 | 18 |
| Admin. Expenses(c)(admin exp/sales) *100 | 14.42 | 16 |
| Tax expense (d)(tax expense/sales) *100 | 3.17 | 3.73 |
| Net profit(a-b-c-d) | 6.45 | 7.27 |
