Boone Company-Horizontal Analysis

| June 11, 2016

Question

Horizontal Analysis of the Income Statement
Income statement data for Boone Company for the years ended December 31, 2014 and 2013, are as follows:

2014

2013

Sales

$508,200

$420,000

Cost of goods sold

440,300

370,000

Gross profit

$67,900

$50,000

Selling expenses

$18,870

$17,000

Administrative expenses

16,660

14,000

Total operating expenses

$35,530

$31,000

Income before income tax

$32,370

$19,000

Income tax expenses

12,900

7,600

Net income

$19,470

$11,400

a. Prepare a comparative income statement with horizontal analysis, indicating the increase (decrease) for 2014 when compared with 2013. If required, round to one decimal place. Enter all amounts as positive numbers.

b. The net income for Boone Company increased by 70.8% from 2013 to 2014. This increase was the combined result of an SelectincreasedecreaseCorrect 1 of Item 2 in sales of 21% and SelecthigherlowerCorrect 2 of Item 2 percentage SelectincreasesdecreasesCorrect 3 of Item 2 in total operating expenses.

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