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Horizontal Analysis of the Income Statement Income statement data for Cascade Images Inc. for the...

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Accounting

Horizontal Analysis of the Income Statement

Income statement data for Cascade Images Inc. for the years ended December 31, 20Y5 and 20Y4, are as follows:

20Y5 20Y4

Sales $562,500 $450,000

Cost of goods sold (486,400) (380,000)

Gross profit $76,100 $70,000

Selling expenses $(21,850) $(19,000)

Administrative expenses (19,680) (16,000)

Total operating expenses $(41,530) $(35,000)

Income before income tax $34,570 $35,000

Income tax expenses (13,800) (14,000)

Net income $20,770 $21,000

Question Content Area

a. Prepare a comparative income statement with horizontal analysis, indicating the increase (decrease) for 20Y5 when compared with 20Y4. Round percentage answers to one decimal place.

b. All of the following statements regarding Cascade Images, Inc. are true except:

Income tax expense decreased from 20Y4 to 20Y5.

Net income decreased from 20Y4 to 20Y5.

Selling and administrative expenses decreased overall.

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