Horizontal analysis of income statement

For $20$Y$2,$ Macklin Inc. reported a significant decrease in net income. At the end of the year, John Mayer, the president, is presented with the following condensed comparative income statement:

Macklin Inc.

Comparative Income Statement

For the Years Ended December $31,20$Y$2$ and $20$Y$1$

Line Item Description $20$Y$220$Y$1$

Sales $$320,730$ $$285,000$

Cost of goods sold $(226,800)(180,000)$

Gross profit $$93,930$ $$105,000$

Selling expenses $$(31,800)$ $$(24,000)$

Administrative expenses $(18,510)(15,000)$

Total operating expenses $$(50,310)$ $$(39,000)$

Operating income $$43,620$ $$66,000$

Other revenue $1,4621,200$

Income before income tax expense $$45,082$ $$67,200$

Income tax expense $(12,600)(20,200)$

Net income $$32,482$ $$47,000$

Required:

Question Content Area

$1.$ Prepare a comparative income statement with horizontal analysis for the two$-$year period, using $20$Y$1$ as the base year. Use the minus sign to indicate a decrease in the "Increase$/($Decrease$)"$ columns. If required, round percentages to one decimal place.

Macklin Inc.

Comparative Income Statement

For the Years Ended December $31,20$Y$2$ and $20$Y$1$

Line Item Description

$20$Y$2$

$20$Y$1$ Increase$/$

$($Decrease$)$

Amount Increase$/$

$($Decrease$)$

Percent

Sales $$320,730$ $$285,000$ $Sales

Sales

$\%$

Cost of goods sold $(226,800)(180,000)$ Cost of goods sold

Cost of goods sold

$\%$

Gross profit $$93,930$ $$105,000$ $Gross profit

Gross profit

$\%$

Selling expenses $$(31,800)$ $$(24,000)$ $Selling expenses

Selling expenses

$\%$

Administrative expenses $(18,510)(15,000)$ Administrative expenses

Administrative expenses

$\%$

Total operating expenses $$(50,310)$ $$(39,000)$ $Total operating expenses

Total operating expenses

$\%$

Operating income $$43,620$ $$66,000$ $Operating income

Operating income

$\%$

Other revenue $1,4621,200$ Other revenue

Other revenue

$\%$

Income before income tax expense $$45,082$ $$67,200$ $Income before income tax expense

Income before income tax expense

$\%$

Income tax expense $(12,600)(20,200)$ Income tax expense

Income tax expense

$\%$

Net income $$32,482$ $$47,000$ $Net income

Net income

$\%$

Question Content Area

$2.$ Net income has fill in the blank $1$ of $4$

from $20$Y$1$ to $20$Y$2.$ Sales have fill in the blank $2$ of $4$

; however, the cost of goods sold has fill in the blank $3$ of $4$

at a faster rate than sales, causing the gross profit to fill in the blank $4$ of $4$

$.$