Answer:
Rustynail Company
1. The net income for the following years:
Common-Size Percents and Trend Percents
               Current   1 Yr    2 Yrs    Current   1 Yr    2 Yrs
                  Yr     Ago    Ago       Yr     Ago    Ago
Sales            100.0 %  100.0 % 100.0 %  104.5 %  103.3 %  100.0 %
Cost of goods sold  63.7     61.5    57.4    116.0    110.7    100.0
Total expenses     14.3     13.8     14.1    106.1     101.1    100.0
Net Income        22.0    24.7    28.5     77.2     86.7    100.0
2. The net income decrease in this three-year period.
Explanation:
a) Data and Calculations:
Common-Size Percents and Trend Percents
               Current   1 Yr    2 Yrs    Current   1 Yr    2 Yrs
                  Yr     Ago    Ago       Yr     Ago    Ago
Sales            100.0 %  100.0 % 100.0 %  104.5 %  103.3 %  100.0 %
Cost of goods sold  63.7     61.5    57.4    116.0    110.7    100.0
Total expenses     14.3     13.8     14.1    106.1     101.1    100.0
Net Income        22.0    24.7    28.5     77.2     86.7    100.0
b) The net incomes for the common-size percents are obtained by deducting the cost of goods sold and the total expenses from sales. Â The net incomes for the trend percents are obtained by stating the base year as 100% and then calculating the other years. Â This takes the form of taking the net income for the analysis year/base year's and then multiplying by 100.
