Revenue and Expense Data for Reuters Company Are as Follows

question 70

Essay

Revenue and expense data for Reuters Company are as follows: $\begin{array}{lrr}&2017&2016\\\text { Administrative expenses } & \$ 24,750 & \$ 18,000 \\\text { Cost of goods sold } & 500,000 & 375,000 \\\text { Income tax } & 11,600 & 12,000 \\\text { Net sales } & 750,000 & 600,000 \\\text { Selling expenses } & 182,250 & 154,800\end{array}$ ?
(a)Prepare a comparative income statement, with vertical analysis, stating each item for both 2017 and 2016 as a percent of sales.
(b)Comment upon significant changes disclosed by the comparative income statement.

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Definitions:

Defence Mechanism

Psychological strategies used unconsciously to protect oneself from anxiety or internal conflicts.

Rationalization

The cognitive process in which individuals justify behaviors or decisions that may otherwise be unacceptable, often by creating a seemingly logical reason for them.

Defence Mechanism

Unconscious psychological strategies brought into play by various entities to cope with reality and to maintain self-image.

Rationalization

The process of providing a logical, plausible, and socially acceptable explanation for behaviors that might otherwise be perceived as irrational.