Response to the following problem:
Revenue and expense data for Home-Mate Appliance Co. are as follows:
2007 2006
Sales $500,000 $450,000
Cost of goods sold 275,000 234,000
Selling expenses 90,000 94,500
Administrative expenses 60,000 63,000
Income tax expense 25,000 22,500
a. Prepare an income statement in comparative form, stating each item for both 2007 and 2006 as a percent of sales.
b. Comment on the significant changes disclosed by the comparative income statement.