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Horizontal Analysis of the Income Statement

Income statement data for Winthrop Company for two recent years ended December 31 are as follows:

	Current Year			Previous Year
Sales	$2,240,000			$2,000,000
Cost of goods sold	(1,925,000)			(1,750,000)
Gross profit	$315,000			$250,000
Selling expenses	$(152,500)			$(125,000)
Administrative expenses	(118,000)			(100,000)
Total operating expenses	$(270,500)			$(225,000)
Income before income tax expense	$44,500			$25,000
Income tax expense	(17,800)			(10,000)
Net income	$26,700			$15,000

a. Prepare a comparative income statement with horizontal analysis, indicating the increase (decrease) for the current year when compared with the previous year. If required, round to one decimal place.

Winthrop Company
Comparative Income Statement
For the Years Ended December 31
	Current year Amount	Previous year Amount	Increase (Decrease) Amount	Increase (Decrease) Percent
Sales	$2,240,000	$2,000,000	$	%
Cost of goods sold	(1,925,000)	(1,750,000)		%
Gross profit	$315,000	$250,000	$	%
Selling expenses	$(152,500)	$(125,000)		%
Administrative expenses	(118,000)	(100,000)		%
Total operating expenses	$(270,500)	$(225,000)	$	%
Income before income tax expense	$44,500	$25,000	$	%
Income tax expense	(17,800)	(10,000)		%
Net income	$26,700	$15,000	$	%

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