McNally Industries has a condensed income statement as shown. $$\begin{array} { | l | l | l | }
\hline & \text { year } 2 & \text { Year 1 } \
\hline \text { Sales } & \$ 198,000 & \$ 165,500 \
\hline \text { Total operating expenses } & 163,000 & 147,500 \
\hline \text { Net income } & 35,000 & 18,000 \
\hline
\end{array}$$ 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. $$\begin{array} { | l | l | l | } 
\hline & \text { year } 2 & \text { Year 1 } \
\hline \text { Sales } & \$ 198,000 & \$ 165,500 \
\hline \text { Total operating expenses } & 163,000 & 147,500 \
\hline \text { Net income } & 35,000 & 18,000 \
\hline
\end{array}$$ 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

Horizontal analysis shows the change in an account balance from one period to the next, expressed as a percentage of the base period. In this case, the base period is Year 1.The amount of change in sales is $198,000 - $165,500 = $32,500. The percent change in sales is $32,500 / $165,500 = 19.6%.

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