Question

Below is the comparative Income statement of C. Gabel, Inc. Click the icon to view the comparative income statement.) Read the requirements Requirement 1. Prepare a horizontal analysis of the comparative Income statement of C. Gabel, Inc. Round percentage changes to the nearest tenth of a percent, XX%. (Use a minus sign or parentheses for a decrease) C. Gabel, Inc. Horizontal Analysis of Comparative Income Statement Years Ended December 31, 2018 and 2017 Increase (Decrease) 2018 2017 Amount Percentage 515,000 S 465,000 Revenue Expenses Cost of goods sold Seling and general expenses Interest expense 262,000 117.200 9,000 50.400 438,600 76,400 S 235,000 112,200 4,500 47.000 398,700 66,300 Income tax expense Total expenses Not Income Enter any number in the edit fields and then continue to the next question

Answer 1

Solution

Horizontal analysis
For the Years Ended December 31,2018 and 2017
	2018	2017	Change	% change
Revenue	$ 515,000	$ 465,000	$ 50,000	10.8%
Expenses
Cost of goods sold	$ 262,000	$ 235,000	$ 27,000	11.5%
Selling and general expenses	$ 117,200	$ 112,200	$ 5,000	4.5%
Interest expense	$ 9,000	$ 4,500	$ 4,500	100.0%
Income tax expense	$ 50,400	$ 47,000	$ 3,400	7.2%
Total expenses	$ 438,600	$ 398,700	$ 39,900	10.0%
Net income	$ 76,400	$ 66,300	$ 10,100	15.2%

Net income increase by a higher percentage than total revenue during 2018 because revenues increased by a higher rate than did total expenses.