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Horizontal Analysis of Income Statement

For 20Y2, McDade Company reported a decline in net income. At the end of the year, T. Burrows, the president, is presented with the following condensed comparative income statement:

McDade Company Comparative Income Statement For the Years Ended December 31, 20Y2 and 20Y1
	20Y2		20Y1
Sales	$768,635		$665,000
Cost of goods sold	554,400		420,000
Gross profit	$214,235		$245,000
Selling expenses	$78,400		$56,000
Administrative expenses	45,080		35,000
Total operating expenses	$123,480		$91,000
Income from operations	$90,755		$154,000
Other income	3,469		2,800
Income before income tax	$94,224		$156,800
Income tax expense	26,400		47,000
Net income	$67,824		$109,800

Required:

1. Prepare a comparative income statement with horizontal analysis for the two-year period, using 20Y1 as the base year. Use the minus sign to indicate a decrease in the "Difference" columns. If required, round to one decimal place.

McDade Company
Comparative Income Statement
For the Years Ended December 31, 20Y2 and 20Y1
	20Y2	20Y1	Difference - Amount	Difference - Percent
Sales	$768,635	$665,000	$	%
Cost of goods sold	554,400	420,000		%
Gross profit	$214,235	$245,000	$	%
Selling expenses	$78,400	$56,000	$	%
Administrative expenses	45,080	35,000		%
Total operating expenses	$123,480	$91,000	$	%
Income from operations	$90,755	$154,000	$	%
Other income	3,469	2,800		%
Income before income tax	$94,224	$156,800	$	%
Income tax expense	26,400	47,000		%
Net income	$67,824	$109,800	$	%

2. Net income has (increased or decreased) from 20Y1 to 20Y2. Sales have (increased or decreased); however, the cost of goods sold has (increased or decreased) , causing the gross profit to (increased or decreased)

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