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Question

Prepare a horizontal analysis of the comparative income statements of McMahon Music Co. Round percentage changes to the nearest one-tenth percent (three decimal places). McMahon Music Co. Comparative Income Statements Years Ended December 31, 2012 and 2011
$\begin{matrix} & \text{2012} & \text{2011}\\ \text{Total revenue } & \text{\$1,077,000} & \text{\$917,000}\\ \text{Expenses: }\\ \text{Cost of goods sold } & \text{\$477,000 } & \text{\$408,750 }\\ \text{Selling and general expenses} & \text{287,000 } & \text{265,000 }\\ \text{Interest expense} & \text{23,500 } & \text{13,500 }\\ \text{Income tax expense } & \text{105,500 } & \text{84,650 }\\ \text{Total expenses } & \text{893,000 } & \text{771,900 }\\ \text{Net income } & \text{\$184,000} & \text{\$145,100}\\ \end{matrix}$

Solution

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Answered 2 years ago

1. In the books of McMahon Music Co. Horizontal analysis of the comparative income statements Years Ended December 31, 2012 and 2011

Particulars	2012 ($) (a)	2011 ($) (b)	Change ($) (c)	% (three decimal places) (c * 100 / b)
Total revenue	1,077,000	917,000	160,000	17.448
Expenses:
Cost of goods sold	477,000	408,750	68,250	16.696
Selling and general expenses	287,000	265,000	22,000	8.301
Interest expense	23,500	13,500	10,000	74.075
Income tax expense	105,500	84,650	20,850	24.630
Total expenses	893,000	771,900	121,100	15.688
Net income	184,000	145,100	38,900	26.810