Revenue and expense data for Innovation Quarter Inc. for two recent years are as follows:
| Current Year | Previous Year | |||
| Sales | $555,000 | $472,000 | ||
| Cost of goods sold | 338,550 | 264,320 | ||
| Selling expenses | 88,800 | 84,960 | ||
| Administrative expenses | 88,800 | 70,800 | ||
| Income tax expense | 16,650 | 18,880 | ||
a. Prepare an income statement in comparative form, stating each item for both years as a percent of sales. If required, round percentages to one decimal place. Enter all amounts as positive numbers.
| Innovation Quarter Inc. | ||||
| Comparative Income Statement | ||||
| For the Years Ended December 31 | ||||
| Current year Amount | Current year Percent | Previous year Amount | Previous year Percent | |
| Sales | $555,000 | % | $472,000 | % |
| Cost of goods sold | 338,550 | % | 264,320 | % |
| $ | % | $ | % | |
| Selling expenses | 88,800 | % | 84,960 | % |
| Administrative expenses | 88,800 | % | 70,800 | % |
| $ | % | $ | % | |
| % | % | |||
| Income tax expense | 16,650 | % | 18,880 | % |
| $ | % | $ | % | |
b. The vertical analysis indicates that the cost of goods sold as a percent of salesincreased by 5 percentage points, while selling expenses decreased by 2 percentage points, and administrative expenses increased by 1 percentage points. Thus, net income as a percent of sales decreased by 3 percentage
