Comparative income statements for Pearle Company are provided below:Pearle CompanyComparative Income StatementYears Ended December 31?Year 2Year 1Sales$ 595,000$ 532,200Less cost of goods sold_____386,200_____357,650Gross margin208,800 174,550Less operating expenses 108,950 ______99,770Income before taxes99,850 74,780 Income taxes______39,940______29,912Net income $ 59,910$ 44,868Required:Perform a horizontal analysis of Pearle Company's income statement by computing horizontal percentages for each item. Round your answer to one decimal place (i.e. 22.5%).
What will be an ideal response?
| Pearle Company | |||
| Comparative Income Statement | |||
| Years Ended December 31 | |||
| ? | Year 2 | Year 1 | Percentage change |
| Sales | $ 595,000 | $ 532,200 | 11.8% |
| Less cost of goods sold | _____386,200 | _____357,650 | 8.0% |
| Gross margin | 208,800 | 174,550 | 19.6% |
| Less operating expenses | 108,950 | ______99,770 | 9.2% |
| Income before taxes | 99,850 | 74,780 | 33.5% |
| Income taxes | ______39,940 | ______29,912 | 33.5% |
| Net income | $ 59,910 | $ 44,868 | 33.5% |
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