Question

1. Express the following comparative income statements in common-size percents and assess whether this company’s situation has improved in the current year.

Comparative Statements (in thousands of $)

          For the Years Ended December 31                                                 Current Year                       Prior Year

                Sales                                                                                                      $800                                       $500

                Total Expenses                                                                                 $560                                       $400

                Net Income                                                                                        $240                                       $100

2. Using the following account balances and other information from Company “A” accounting records for year-end December 31, 2019. Prepare a multi-step income statement.

Answer 1

Income Statement

Particular	Current Year	Percentage	Prior Year	Percentage
Sales	$800	100%	$500	100%
Less: Expenses	$560	$560/$800*100= 70%	$400	$400/$500*100=80%
Net Income (Sales-Expenses)	$240	$240/$800*100=30%	$100	$100/$500*100= 20%

Assessment= One can see that profit percentage have been improved since last year.So, company's situation have beem improved.