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:

Answer: Income Statement

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

Answer:

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

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.