Problem 9-2

Name:
Section:

Score: 100%

Key Code: 2
Instructions
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1. FISHING EXPERIENCES INC.

Comparative Income Statement
For the Years Ended December 31, 20Y6 and 20Y5

20Y6 20Y5
Amount Percent Amount
Sales $ 1,200,000 100.0% $ 1,000,000
Cost of goods sold (624,000) -52.0% (558,000)
Gross profit $ 576,000 48.0% $ 442,000
Selling expenses $ (120,000) -10.0% $ (75,000)
Administrative expenses (50,000) -4.2% (50,000)
Total operating expenses $ (170,000) -14.2% $ (125,000)
Income from operations $ 406,000 33.8% $ 317,000
Other income 30,000 2.5% 30,000
Income before income tax $ 436,000 36.3% $ 347,000
Income tax expense (benefit) (100,000) -8.3% (90,000)
Net income (loss) $ 336,000 28.0% $ 257,000

2. The analysis indicates that sales, cost of goods sold, selling expenses, and net income all increased as a result of a
successful sales promotion.
5

20Y5
Percent
100.0%
-55.8%
44.2%
-7.5%
-5.0%
-12.5%
31.7%
3.0%
34.7%
-9.0%
25.7%

e all increased as a result of a