Savanah Company reported the following amounts of net income.

Which of the following is the percentage change in net income from Year 2 to Year 3?
A)25.0%
B)(30.0%)
C)20.0%
D)(20.0%)
E)None of the answer choices is correct.

Question

Savanah Company reported the following amounts of net income.

Which of the following is the percentage change in net income from Year 2 to Year 3?
A)25.0% 
B)(30.0%) 
C)20.0% 
D)(20.0%) 
E)None of the answer choices is correct.

Quizplus · Accepted Answer

To calculate the percentage change, we need to find the difference in net income from year 2 to year 3 and then divide it by the net income of year 2.

Difference in net income from year 2 to year 3 = $400,000 - $500,000 = -$100,000

Percentage change = (Difference/Year 2 net income) x 100
= (-$100,000/$500,000) x 100
= -20

The negative sign indicates a decrease in net income. So, the percentage change is 20% decrease, which can be written as (20.0%) as per the given answer choices. Therefore, the correct answer is D) (20.0%).

Savanah Company Reported the Following Amounts of Net Income