Question

he following percentages apply to Thornton Company for 2018 and 2019: 2019 2018 Sales 100.0 % 100.0 % Cost of goods sold 61.0 64.0 Gross margin 39.0 36.0 Selling and administrative expense 26.5 20.5 Interest expense 2.5 2.0 Total expenses 29.0 22.5 Income before taxes 10.0 13.5 Income tax expense 5.5 7.0 Net income 4.5 % 6.5 % Required Assuming that sales were $800,000 in 2018 and $960,000 in 2019, prepare income statements for the two years.

Answer 1

Answer: Income Statement

Step-by-step explanation:

2019 $ % 2018 $ %

Net Sales 960,000 100 800,000 100

C. goods sold 585,600 61.0 512,000 64.0

Gross Profit 374,400 39.0 288,000 36.0

S.&A.Exp. 254,400 26.5 164,000 20.5

Interest Exp. 24,000 2.5 16,000 2.0

Total Exp. 278,400 29.0 180,000 22.5

Incomeb4tax 96,000 10.0 108,000 13.5

Income tax exp. 52,800 5.5 56,000 7.0

Net Income 43,200 4.5 52,000 6.5

Answer 2

Income statement is prepared and attached with this answer please find it.

Step-by-step explanation:

Income statement of both years is made using the ratios / percentage of each element. For example the cost of goods sold is calculated as $585,600 (960,000 x 61.0%) by multiplying the sales value to the respective percentage of cost of goods sold in 2019, which 61.0%. Same as for the 2018 figure.