McNally Industries has a condensed income statement as shown. $\begin{array}{|l|r|r|}
\hline & \text { Year 2 } & \text { Year 1 } \
\hline \text { Sales } & \$ 198,000 & \$ 165,500 \
\hline \text { Total operating expenses } & 163,000 & 147,500 \
\hline \text { Net income } & 35,000 & 18,000 \
\hline
\end{array}$
Using horizontal analysis,calculate the amount and percent change for sales.Round to one decimal place.
A)$32,500,19.6%
B)$18,000,10.9%
C)$35,000,17.7%
D)$17,000,9.4%

Question

McNally Industries has a condensed income statement as shown. $\begin{array}{|l|r|r|}
\hline & \text { Year 2 } & \text { Year 1 } \
\hline \text { Sales } & \$ 198,000 & \$ 165,500 \
\hline \text { Total operating expenses } & 163,000 & 147,500 \
\hline \text { Net income } & 35,000 & 18,000 \
\hline
\end{array}$
 Using horizontal analysis,calculate the amount and percent change for sales.Round to one decimal place.
A)$32,500,19.6%
B)$18,000,10.9%
C)$35,000,17.7%
D)$17,000,9.4%

Quizplus · Accepted Answer

To calculate the amount and percent change for sales using horizontal analysis, we need to find the difference in sales from Year 1 to Year 2 and then divide that difference by the sales from Year 1.

Difference in sales: $198,000 - $165,500 = $32,500
Percent change: $\frac{	ext{difference}}{	ext{Year 1 sales}} 	imes 100\% = \frac{32,500}{165,500} 	imes 100\% \approx 19.6\%$

Therefore, the best choice is A, $32,500,19.6\%$.

McNally Industries Has a Condensed Income Statement as Shown Using Horizontal Analysis,calculate the Amount and Percent Change for Sales